## TRANSFORMING ## TOMORROW ### 2023 Annual Report Above: Green Park Village, Reading Front cover top: Aerial view of the former gasworks on Imperial Road, Fulham Front cover bottom: The site today, nowcalled Chelsea Creek ## CONTENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | | --- | --- | | Highlights of the Year 02 | Governance at a Glance 102 | | Committed to Brownfield Regeneration 04 | Chairman’s Introduction 104 | | Our Business Model 10 | Board of Directors 106 | | Our Investment Case and Shareholder Returns 12 | Board Leadership and Company Purpose 110 | | Key Performance Indicators 14 | Division of Responsibilities 119 | | Chairman’s Statement 18 | Nomination Committee Report 122 | | Chief Executive’s Review 20 | Audit Committee Report 128 | | Market Overview 28 | Directors’ Remuneration Report 132 | | Trading and Financial Review 30 | Directors’ Report 157 | | Responsible Business at a Glance 36 | Statement of Directors’ Responsibilities 162 | Our Vision 2030: Strategy at a Glance 38 ## FINANCIAL STATEMENTS Our Vision 2030: 10 Strategic Priorities 40 | Economic Contribution 55 | Independent Auditor’s Report 163 | | --- | --- | | The Berkeley Foundation 56 | Consolidated Income Statement 174 | | ESG Performance 58 | Consolidated Statement of Comprehensive Income 174 | | SASB Disclosure 60 | Consolidated Statement of Financial Position 175 | | TCFD Recommended Disclosure 62 | Consolidated Statement of Changes in Equity 176 | | Non-Financial and Sustainability Information | Consolidated Cash Flow Statement 177 | 78 Statement Notes to the Consolidated Financial Statements 178 Section 172(1) Statement 79 Company Balance Sheet 211 Engaging with Our Stakeholders 80 Company Statement of Changes in Equity 212 How We Manage Risk 86 Notes to the Company Financial Statements 213 Viability Statement 89 Five Year Summary 217 Risks 90 Financial Diary 218 Registered Office and Advisors 219 Berkeley Group 2023 Annual Report ## ABOUT ## BERKELEY Strategic Report ## OUR PURPOSE Berkeley’s purpose is to build quality homes, strengthen ### communities and make a positive difference to people’s ### lives, using our sustained commercial success to make ### valuable and enduring contributions that benefit all of ### our stakeholders. Corporate Governance Financial Statements ## LONG-TERM Berkeley has a unique long-term model that is ## STRATEGY responsiveto the cyclical nature of the housing ### marketand focuses on large-scale developments ### whereour expertise and financial strength can ### unlocklong-term value for our stakeholders. ### This disciplined approach allows Berkeley to deliver ### sustainable, risk-adjusted returns over the housing ### market cycle, targeting a sustained pre-tax return ### onequity of 15%. Read more on Our Business Model on pages 10 to 11 and Our Investment Case onpage 12. | BROWNFIELD | OPERATING | FINANCIAL | | --- | --- | --- | | REGENERATION | STRATEGY | STRATEGY | | Berkeley is the only UK homebuilder | Our Vision 2030: Transforming | Reflects the cyclical nature | | delivering urban regeneration at | Tomorrow sets 10 strategic | andcomplexity of brownfield | | scale. We believe that reviving | priorities for the business over | development, protecting and | | brownfield land is theonly | thecurrent decade designed | enhancing long-term value | | sustainable way to solve the | todrive our performance, spur | forshareholders and using | | housing crisis, strengthen left | innovation and reinforce our | ourdevelopment expertise | | behind communities and re- | position as the country’s most | tomaximise the return from | | energise our towns and cities to | sustainable developer. | eachofour assets. | meet the challenges of tomorrow. Read more on pages 04 to 09. Read more on pages 36 to 54. Read more on page 11. ## OUR VISION 2030 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. 01Berkeley Group 2023 Annual Report # HIGHLIGHTS OF THE YEAR Berkeley's operating model is uniquely long-term, deploying capital to unlock large-scale brownfield regeneration projects. The outcomes we are reporting today reflect investment and placemaking strategies applied over many years. ![img-0.jpeg](img-0.jpeg) Grand Union, Brazil ## FINANCIAL AND SHAREHOLDER RETURN HIGHLIGHTS | Year ended 30 April | 2023 | 2022 | | --- | --- | --- | | **Earnings** | | | | Profit before tax | £604.0m | £551.5m | | Basic earnings per share | 426.8p | 417.8p | | Pre-tax return on equity | 18.7% | 17.5% | | **Shareholder Returns** | | | | Share buy-backs undertaken | £155.4m | £63.7m | | B-Share capital return | - | £451.5m | | Dividends paid | £98.5m | - | | Total shareholder returns | £253.9m | £515.2m | | Share buy-backs - volume | 4.0m | 1.5m | | Average price paid for share buy-backs | £38.25 | £41.81 | | Dividends/B-Share return per share | £0.91 | £3.71 | | As at 30 April | 2023 | 2022 | | **Financial Position** | | | | Net cash | £410m | £269m | | Net asset value per share | £31.01 | £28.18 | | Cash due on forward sales | £2,136m | £2,171m | | Land holding plots | 58,045 | 66,163 | | Land holding sites | 73 | 89 | | Land holdings future gross margin | £7,629m | £8,258m | | Pipeline plots (approximate) | 14,000 | 8,000 | | Pipeline sites | 14 | 6 | 02 Berkeley Group 2023 Annual Report ## DELIVERING FOR ALL STAKEHOLDERS Homes delivered Brownfield regeneration Accreditations Strategic Report Corporate Governance Financial Statements | 4,043 | 86% | | --- | --- | | homes delivered (plus 594 in joint | of the homes delivered during the year | | ventures), including some 10% of | are on regenerated brownfield land | London’s new private and affordable homes, supporting, on average, 27,000UK jobs directly and indirectly through our supply chain each year Communities Customers | £560m | +79. 2 | | --- | --- | | of subsidies provided to deliver affordable | Net Promoter Score (NPS) from our | | housing and committed to wider | customers, compared to an industry | | community and infrastructure benefit | average of 42 (HBF, March 2023) | Climate action Nature recovery | A- | >550acres | | --- | --- | | Rated ‘A-’ by CDP for climate action | of new or measurably improved | | and transparency | natural habitats across 54biodiversity | net gain sites Scopes 1 and 2 science-based target (SBT) for emissions reduction met wellahead of our 2030 goal Woodberry Down, Hackney 03Berkeley Group 2023 Annual Report ## COMMITTED TO ## BROWNFIELD ## REGENERATION ### Returning neglected brownfield land to community use ### isa Government priority; helping to meet local housing ### needs, revive left-behind places, energise economies ### andrelieve pressure on greenfield land. ### Large-scale brownfield sites — Complex planning environment,including ### present unique challenges protectedviews, conservation ### compared to typical areas and listed buildings ### greenfield sites on the — Restoring sensitive heritage ### edgeof built up places: assetsand listed buildings — Very high capital requirements — Delivering strategic infrastructure deployed over the long-term and enabling works — Operating in busy built-up areas — Complex planning, regulatory with multiple land ownerships andlegal process, with greater — Mix of sensitive neighbours number of stakeholders and statutory consultees — Extensive demolition and landremediation — Complex unknown groundconditions Fulham Gasworks before regeneration community suchas schools, Computer generated image of King’s Road Park ### Successful brownfield healthfacilities, community ### regeneration can deliver centres, wetlands andparks ### significant lasting — Deliver homes alongside existing ### positivechange: public transport and social — Bringing direct investment infrastructure networks, reducing intoexisting communities car dependence and supporting — Removing run-down sites sustainable, low carbon living andgivinga visible lift to a — Support nature recovery through localarea, creating the catalyst bringing accessible green space fora wider cycle of renewal and biodiverse habitats back into — Delivering new amenities urban areas andpublic infrastructure withinexisting neighbourhoods where they support the wider ### Berkeley is the only large — We retain the unique in-house expertise and experience to ### UKhomebuilder delivering overcome the complex inter- ### brownfield regeneration related challenges surrounding ### atscale: planning, community engagement, — We focus on complex sites within regulation, remediation, third the most severely under-supplied parties, infrastructure, development, housing markets sustainability andplacemaking — We focus on unlocking these — We take a bespoke approach large-scale urban brownfield tothedesign of each of our sitesover the long-term, through developments and the homes housing market cycles webuild with an unerring focus onquality of design and place — We maintain the strong capital base needed to deliver multiple highly capital intensive programmes London Dock, Wapping 04 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements ## 32 LARGE REGENERATION SITES ### Berkeley is the only large UK homebuilder to align with the ### Government on prioritising brownfield land, as we progress ### 32ofthe country’s most challenging regeneration projects. Large, complex Land holdings at 30 April 2023 regeneration sites Other sites Total land holdings Delivery of developments: In construction 26 87% 25 58% 51 70% Not yet in construction – owned 4 13% 18 42% 22 30% Not yet in construction – contracted – – – – – – Total developments 30 100% 43 100% 73 100% Pipeline regeneration sites 2 Land status: Plots – Owned 41,448 71% 16,597 29% 58,045 100% Plots – Contracted – – – – – – Plots with outline planning 93% 85% 91% Brownfield – percentage 100% 51% 86% Berkeley also has approximately 14,000 plots on 14 sites that constitute its pipeline. | | In production | | Future sites | | | --- | --- | --- | --- | --- | | 1 250 City Road, lslington | | 1 Aylesham Centre, Peckham | | | | 2 Beaufort Park, Hendon | | 2 Bow Common | | | | 3 Bermondsey Place, Southwark | | 3 Borough Triangle | | Read more about White City | Living on pages 06 to 07. | 4 Camden Goods Yard | 4 Romford* | | --- | --- | | 5 Chelsea Creek | 5 Sutton | | 6 Clarendon, Haringey | 6 Syon Lane, Brentford* | 7 Grand Union, Brent 8 Green Park Village, Reading 21 9 Hartland Village, Fleet 10 Horlicks Quarter, Slough 11 Kidbrooke Village 2 12 King’s Road Park, Fulham 19 6 13 Lombard Square, Plumstead 26 4 14 London Dock, Wapping 15 Oval Village 10 7 16 Poplar Riverside 4 1 23 17 Prince of Wales Drive, 2 24 | | | | | | 25 | | | | | | | | 16 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Wandsworth | | | | | | | | | | 14 | | | | | | | | | | 22 | | | | | | | 3 | | | 20 | | | | | 18 Royal Arsenal Riverside, | | | | | | | | | | | | | | | 18 | 13 | | | | | | 6 | | | | | | | | 3 | | | | | | | | | | | | 12 | | | 15 | | | | | | | | | | Woolwich | 8 | | | | | | | | | | | | | | | | | | | | | | | 5 | 17 | | | | | | | | | | | | | | | | | | | | | | 1 | | 11 | | | 19 Silkstream, Barnet 20 South Quay Plaza, Docklands 21 The Eight Gardens, Watford 22 The Green Quarter, Ealing 23 TwelveTrees Park, Newham 9 24 West End Gate, Paddington 5 25 White City Living Read more about Oval 26 Woodberry Down, Village on pages 08 to 09. Finsbury Park * Pipeline site 05Berkeley Group 2023 Annual Report ## CASE STUDY: BROWNFIELD ## REGENERATION IN ACTION ## WHITE CITY ## LIVING ### White City Living is one of Berkeley’s ### 32 long-term brownfield regeneration ### projects. Unlocking this isolated 11-acre ### former Marks & Spencer warehouse site ### required complex enabling infrastructure, ### abroad range of expertise and an upfront ### capital investment of more than £200 million. ### The initial investment phase was six years, ### from site purchase to the completion of ### thefirst homes. Today, the site has been re-connected to its surroundings and is fulfilling its potential as a highly sustainable mixed use neighbourhood, centred around a beautiful 5-acre park An 11-acre warehousing site cut-off by and with new pedestrian links to Wood Lane, Westfield railwayviaducts and a wide Tube cutting Shopping Centre and Imperial College London campus. This growing community is located alongside two existing Tube stations and was named Best Regeneration Scheme at the 2022 WhatHouse? Awards. ### Challenges — Isolated 11-acre warehousing site — Rail and Tube lines along three boundaries — Single point of access over a narrow bridge — 25 utility services required diversions — Contaminated land with complex below ground conditions — Provision of public park serving the wider White City Opportunity Area Part of the 5-acre public park at White City Living 06 Berkeley Group 2023 Annual Report ### Solutions — Over £200 million upfront capital investment to unlock the site prior todelivering the first homes — 3-year engagement and planning process to develop the design andinfrastructure solutions Strategic Report Corporate Governance Financial Statements — 4-year infrastructure delivery programme to create access and deliver the park — New bridges and pedestrian decks built over an open Tube line cutting with work only permitted late at night once the Central Line stopped running — Partnered with Transport for London (TfL) to convert closed-up Victorian railway arches to create multiple pedestrian routes to neighbouring Westfield Shopping Centre and 24 unique office/retail spaces — Key Landowner Partnerships with Westfield, Imperial College London, Network Rail, Transport for London and London Underground to enable the delivery of the access infrastructure ### Outcomes Homes for all ## 2,500 homes including over 650 affordablehomes onsite and £34 million contribution to offsiteaffordable homes Community investment ## £77m contribution through Community Infrastructure Levy and S106 Natural open space ## 86% biodiversity net gain, with half the site becoming public open space Local amenities ## 56,000 square feet of commercial space including, shops, cafés, restaurants and community space Low carbon living energy efficient building fabric, communal heat and power network, electric car charging Driving growth and renewal a catalyst for the wider regeneration of the White CityOpportunity Area Scan the code to find outmore about the regeneration of WhiteCityLiving 07Berkeley Group 2023 Annual Report ## CASE STUDY: BROWNFIELD ## REGENERATION IN ACTION ## OVAL ## VILLAGE ### Oval Village is one of Berkeley’s 32 long- ### term brownfield regeneration projects. ### Unlocking this 8-acre inner London site ### (which includes four derelict gasholders ### and an adjacent supermarket and warehouse) ### required a complex package of enabling ### works, highly sensitive working practices ### and extensive engagement with the ### surrounding community, the London An 8-acre brownfield site, includingfourderelictgasholders ### Borough of Lambeth, local businesses, ### theGreater London Authority, Tesco, ### SGNand Surrey County Cricket Board. The upfront capital investment was over £150 million, withthe initial investment phase of seven years, from sitepurchase to delivery of the first homes. The first residents moved in to Oval Village in 2022, withthe total masterplan on course to deliver more than 1,300 homes set around car-free streets, public squares and biodiverse landscaping. This low carbon, mixed use neighbourhood is located a short walk from the transport hubs at Vauxhall interchange station and Kennington and Oval stations on the Northern Line. It will deliver more than1,000 permanent jobs across 160,000 square feet ofcommercial and community space, including Oval Works; an innovative flexible workspace being delivered inpartnership with Landsec. ### Challenges — Closed-off and contaminated site including fourgasholders — Close residential and commercial neighbours — Retention of listed gasholder — Retaining an active gas network pressure reductionstation — Early delivery of a new Tesco store to release previous supermarket footprint — Utility services diversions — Working with London Borough of Lambeth to create the Oval and Kennington Development Area Masterplan, which led to the area’s designationasa new mixed use community Computer generated image of Oval Village 08 Berkeley Group 2023 Annual Report ### Solutions — Over £150 million upfront capital investment to unlock site prior todelivering the first homes — Close working with surrounding community to co-create a locally influenced masterplan Strategic Report Corporate Governance Financial Statements — Sensitive operational approach respecting close neighbours — Re-integrating the site with surrounding street network — On site restoration of listed gasholder which forms the historic centrepieceof Oval Village — Partnership working with neighbouring housing estates to enhance localenvironment and maximise local employment and skills training ### Outcomes Homes for all ## 1,300 homes including around 500affordable homes Community investment Ben is among the first residents to enjoy ## an affordable homeat Oval Village £28m contribution through Community Infrastructure Levy and S106 Natural open space ## 179% biodiversity net gain through agreen and pedestrian-friendly landscape, with car-free streets, trees and public squares Local amenities ## 160,000 square feet of commercial andcommunity space including shops, cafés, supermarket, restaurants, flexible office spaceand community space Low carbon living energy efficient building fabric,communal heat and powernetwork, electric car charging, close to transport hubs Awards Best Housing Scheme Award atthePlanning Awards 2023 Mayor of London’s Award for GoodGrowth at the London Planning Awards 2020 09Berkeley Group 2023 Annual Report ## OUR BUSINESS MODEL ## OUR CORE ## ACTIVITIES — Acquire land at the right time in — Consistent health and safety — Berkeley’s brand leadership and the cycle, targeting sites where we andbuild quality standards reputation for lasting product can add value over the long-term embedded into operations quality provides a clear competitive through our regeneration and advantage in core markets — Highly experienced and expert place-making expertise in-house site management — Diversified sales channels — Adopt an innovative approach teamsand direct partnerships acrossowner occupiers, topartnering with land owners, with building trades, rather privateand institutional such as joint venture partners, thanmain contractor led sites investors,retirement living and local authorities or other third affordable housing providers — Investing in advanced party landowners manufacturing and digital — Focus on complex, large- technologies to enhance scalebrownfield sites in under- andmodernise our suppliedmarkets where we productionprocesses cantake a bespoke approach toeach development ### Land acquisition Building new Marketing and ### homesandplaces sellingnewhomes ### Designing and planning Sustainability Placekeeping ### new homes and places andclimateaction andstewardship | — Reputation for successful | — Ambitious, sustainable and long- | — Demonstrable long-term track | | --- | --- | --- | | regeneration delivery underpins | term business strategy Our Vision | record of outstanding customer | | theplanning process | 2030: Transforming Tomorrow | service and satisfaction | | — Embrace a highly collaborative | — Strong focus on climate | — Long-term strategies | | approach to placemaking | action,nature recovery and | foreffectiveestate and | | | strengthening communities | communitymanagement, | — Design unique and beautiful workingin partnership with places in partnership with local — Focus on urban brownfield residents and managing agents authorities and communities regeneration, which is inherently sustainable, socially inclusive and supports a lower carbon model for modern living Berkeley’s unique culture is the sum of our shared values, vision, traditions ## UNDERPINNED andoverarching sense of purpose. Together, they have a dynamic and ## BY OUR CULTURE energising effect on the way we work, shaping our day-to-day behaviours, ## AND VALUES manners and actions, our goals, our expectations of one another, our long-term strategies and our brand. 10 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements ## OUR OPERATIONAL OUR FINANCIAL STRATEGY ## STRUCTURE AND CAPITAL ALLOCATION ### Berkeley’s operational structure is The financial strategy reflects the cyclical ### decentralised, with a number of core nature of the housing market and the ### operating teams located in London complex and capital intensivenature ### andtheSouth East that are focused oflarge-scale brownfielddevelopment. ### onindividual asset returns. Berkeley finances its operations by a combination ofshareholders’ funds, working capital and, where Each team is autonomous, entrepreneurial and highly appropriate, net borrowings. collaborative, with significant expertise and local market knowledge. Consequently, we are agile and responsive to Our approach to capital management is to maximise the changes in the operating environment. returns from our assets, whilst maintaining the financial flexibility to respond to the prevailing market conditions Our teams operate across six market leading brands: and operating environment through the pace of new land and construction investment. We thereby protect and 100% owned: enhance long-term value for shareholders. ### Berkeley’s capital allocation policy is clear: ### Ensure financial strength is ## 1. appropriate to the prevailing ### operating environment ### Invest in the business (new land ## 2. andconstruction activity) at the ### righttime and pace Joint venture: ### Make returns to shareholders through ## 3. dividends and share buy-backs Our key performance indicators are aligned to our strategy and are used to actively monitor business performance and delivery for our stakeholders. Read more on pages 14 to 15. Excellence Be passionate Respect people Think creatively Have integrity through detail Take pride in what Work together, Find individual Build trust by Deliver the best we do and the empower people solutions for every beingopen, clear through attention impact we make and value their site and situation andcredible todetail in contribution everythingwedo 11Berkeley Group 2023 Annual Report ## OUR INVESTMENT CASE ### Berkeley has a strong track record of delivery, profitability ### and cash generation through market cycles, reflecting its ### uniquely long-term business model, which is underpinned ### by five key features: — Delivering sustainable homes and neighbourhoods on brownfield land ### 1. Only large UK withsignificant socio-economic benefits ### homebuilder focused — Aligned with Government’s brownfield first agenda ### onbrownfield — Each project individually designed in partnership with local authorities ### regeneration at scale andcommunities — London has global appeal, with deep and proven demand ### 2. Core London and — Berkeley delivers over 10% of London’s new private and affordable ### SouthEast markets homeseach year ### aresystematically ### undersupplied — Net cash of £410 million, with £1,200 million of available debt facilities ### 3. Significant financial — Cash due on private forward sales under exchanged contracts of £2.1 billion ### strength giving the — Land holdings estimated future gross margin of £7.6 billion across 58,000homes ### business strategic ### optionality — Not under pressure to buy land ### 4. Unrivalled land — Over 70% of homes are in London ### holdingssustaining — 91% of homes have outline or full planning consent ### delivery profile for ### thenext 10 years — Bottom-up approach which identifies the best development solution and ### 5. Added value developer maximises absolute returns from each site ### focused on maximising — Sales volumes important on a site-by-site basis, but are not the sole ### returns on every site determinant for creating value — Long-term value is created through the land and planning strategy atanypoint in the cycle — Risk managed through land approach and forward selling — Agile and responsive to the prevailing operating environment ### Strong and Sustained Shareholder Returns ### Berkeley has a long-term track record of delivering ### shareholder value through investing in the business, ### and then generating and returning surplus cash at ### the right points in the market cycle. ## 599% TSR ### (Total Shareholder Return) over the last 15 years 12 Berkeley Group 2023 Annual Report ## SHAREHOLDER RETURNS Strategic Report Corporate Governance Financial Statements ### Berkeley announced a £1.7 billion 10-year shareholder ### returns programme in 2011, enhanced by £0.6 billion ### in2015 and then extended in 2018 by four years and ### enhanced by £1.1 billion, bringing the total cash returns ### to£3.4 billion. ### In addition, surplus cash of £0.2 billion has been returned ### to shareholders, bringing the total cash returns since 2011 ### and planned through 2025 to £3.6 billion. Annual Return Dividend B-Share Return Share Buy-backs Amounts: £m Paid / share Paid / share Paid No. / share 1 May 12 – 30 April 13 20 20 £0.15 – – – – – 1 May 13 – 30 April 14 195 195 £1.49 – – – – – 1 May 14 – 30 April 15 244 244 £1.80 – – – – – 1 May 15 – 30 April 16 260 260 £1.90 – – – – – 1 May 16 – 30 April 17 300 255 £1.85 – – 45 1.5m £29.38 1 May 17 – 30 April 18 287 147 £1.09 – – 140 4.0m £35.38 1 May 18 – 30 April 19 252 53 £0.40 – – 199 5.6m £35.59 1 May 19 – 30 April 20 280 150 £1.19 – – 130 3.5m £37.05 1 May 20 – 30 April 21 334 145 £1.16 – – 189 4.4m £42.84 1 May 21 – 30 April 22 516 – – 452 £3.71 64 1.5m £41.81 1 May 22 – 30 April 23 254 99 £0.91 – – 155 4.0m £38.25 Total cash returns to date 2,942 1,568 £11.94 452 £3.71 922 24.5m £37.50 Remaining cash returns 672 to 30 September 2025 Total cash returns 3,614 | £31.01 | £37. 50 | £2.63 | | --- | --- | --- | | net asset value per share | per share | per share | | up from £7.09 net | average cost of | ongoing annual return | | asset value per share | 24.5 million shares | under 2011 Programme | | at 1 May 2011 | acquired since 2016 | (originally £2.00 per share) | ### whenshare buy-backs ### were first introduced ### Delivery of the 2011 Programme ### 2011 2015 2016 2018 | Announced £13.00 per | Announced £3.34 | Announced remaining | Announced extension | | --- | --- | --- | --- | | share (c. £1.7 billion) via | increase to £16.34 per | £10.00 per share returned | of annual £280 million | | dividends over a 10-year | share (£2.3 billion) | through share buy-backs | by a further four years | | timeframe to 2021 | | and dividends | toSeptember 2025 | Remaining £12.00 per | £4.33 per share was to | share scheduled in equal | Annual return of £2.00 per | This brought total returns | | --- | --- | --- | --- | | be returned by each of | annual dividends of £2.00 | share was re-categorised | to £3.4 billion. In addition, | | 30 September 2015, 2018 | per share (c. £280 million) | as an absolute value per | £0.2 billion of surplus | | and 2021 | over remaining 6 years | annum (c. £280 million) | cash was returned in | | | (September 2021) | | September 2021 | 13Berkeley Group 2023 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 Profit before tax Pre-tax return on equity Net cash £m % £m | 2022 | | 551.5 | 2022 | 17.5 | | 2022 | 268.9 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | 518.1 | 2021 | 16.5 | | 2021 | | 1,128.2 | | 2020 | 503.7 | | 2020 | 16.6 | | 2020 | | 1,138.9 | | | | | 2019 | | 27.9 | | | | | This is our core measure of profitability, | | | This is the efficiency of the returns | | | This provides a measure of the | | | | our absolute return from the sale and | | | generated from shareholder equity | | | financialstrength of the Group. | | | | delivery of new homes in the year. | | | inthebusiness. | | | | | | The £0.4 billion of net cash at 30 April | Definition | | Read more on remuneration: | 2023 combined with £1.2 billion of | | --- | --- | --- | --- | | Profit earned by the Group during | page 133. | | borrowing capacity provides the Group | | theyear, including any finance income | | | with total liquidity of £1.6 billion. | Definition and costs and share of results of joint This is measured by calculating profit Definition ventures, but before any tax expense. before tax as a percentage of the Cash and cash equivalents, less total average of opening and closing borrowings. See page 200. shareholders’ funds. See page 204. Link to strategy Link to strategy Link to strategy ## NON-FINANCIAL KPIs Net Promoter Score (NPS) Annual Injury Incidence Rate (AIIR) Direct apprentices and training Rate Rate per 100,000 people % | 2022 | 77.2 | 2022 | 72 | | 2022 | | 9 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | 77.9 | 2021 | | 124 | 2021 | 7 | | | | 2020 | 78.8 | 2020 | | 117 | 2020 | | 9 | | | 2019 | 73.5 | | | | 2019 | | | 10 | | Our six month rolling NPS is an indicator | | This measure shows the number of | | | This measure shows the proportion of | | | | | of the success of our efforts to provide | | reportable injuries during the year, | | | our employees who are an apprentice, | | | | | world-class customer service. Our NPS | | inrelation to the number of Berkeley | | | graduate or sponsored student. On | | | | | significantly exceeds the sector average | | employees and on site contractors. | | | average, we had 160 apprentices, 70 | | | | | of 42 (HBF, March 2023) and compares | | Itsignificantly outperforms the | | | graduates and around 80 sponsored | | | | | favourably with top-performing | | construction industry average | | | students during the course of the year. | | | | | consumer brands. | | of326(HSE, October 2022). | | | | | | | Definition | Definition | Definition | Calculated as the average monthly | | --- | --- | --- | | Customers register a score between | This rate is calculated by taking the | percentage of our direct workforce | | 0 – 10 of how likely they are to | number of reportable injuries across | whoare apprentices, graduates or | | recommend us to a friend; 9 – 10 being | ouroperations throughout the year, | sponsored students, in line with the | | classified as promoters, 7 – 8 being | multiplied by 100,000, divided by the | definition provided by The 5% Club. | | passive, and 0 – 6 being detractors. | average number of people working | | | TheNPS is the percentage of promoters | across our activities in the year. | | less the percentage of detractors. Link to strategy Link to strategy Link to strategy 2023 2023 2023 2023 2023 2023 410.4 18.7 79 604.0 79.2 10 14 Berkeley Group 2023 Annual Report 2019 2019 2019 975.0 114 775.2 Key to strategy Customers Quality Communities Climate Action Nature Strategic Report Corporate Governance Financial Statements Employee Modernised Future Supply Shared Experience Production Skills Chain Value Net asset value per share Cash due on forward sales Future gross margin in land holdings £ £m £m | 2022 | | | 28.18 | 2022 | | 2,171 | 2022 | | 8,258 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | 26.12 | | 2021 | 1,712 | | 2021 | 6,884 | | | 2020 | | 24.72 | | 2020 | 1,858 | | 2020 | 6,417 | | | 2019 | 23.05 | | | | | | | | | | This Balance Sheet measure reflects the | | | | This measures cash due from customers | | | This provides a measure of expected | | | | value of shareholders’ interests in the net | | | | under unconditional contracts and | | | valuein the Group’s land holdings, | | | | assets of the business. | | | | reflects the strength and financial stability | | | including its share of joint ventures, in | | | | | | | | of the business from secured future sales. | | | theevent that it successfully sells and | | | Definition delivers the developments planned for. Net assets attributable to shareholders Definition divided by the number of shares in issue, This measures cash still due from Definition excluding shares held in treasury and customers at the relevant Balance This represents management’s risk shares held by the Employee Benefit Sheetdate during the next three years adjusted assessment of the potential Trust. See page 203. under unconditional contracts for sale. grossprofit for each of the Group’s sites, Itexcludes forward sales of affordable including the proportionate share of its housing, commercial properties and joint ventures, taking account of a wide institutional sales, and forward sales range of factors, including: current sales within the Group’s joint ventures. See and input prices; the economic and political page 204. 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 Greenhouse gas (GHG) Affordable housing subsidies Brownfield regeneration emissionsintensity tCO 2 e/100 sq m and wider contributions £m % | 2022 | 0.61 | | | 2022 | | | 556 | 2022 | 86 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | 0.95 | | 2021 | 204 | | | 2021 | 87 | | 2020 | | | 1.24 | 2020 | | 270 | | 2020 | 89 | | This measure relates to our annual | This measures our contribution to | This measure shows the proportion of | | --- | --- | --- | | scopes 1 and 2 (market-based) GHG | affordable housing subsidies and | our homes delivered during the year | | emissions resulting from our direct | widercommunity and infrastructure | (including joint ventures) on brownfield | | activities to the floor area legally | benefits delivered or committed to | regeneration land. | | completed in the year. The figure is | during the year. The value in any one | | Definition disclosed on an operational reporting yearis influenced by the number and This is measured by calculating the boundary, in line with our science-based mixof homes delivered. number of homes delivered during the target (SBT). | | Definition | year on brownfield regeneration land | | --- | --- | --- | | Definition | This is the total financial value of | asapercentage of total homes delivered | | This is calculated by dividing the absolute | community and infrastructure benefits | during the year. | | market-based GHG emissions resulting | committed to under section 106 | | | from our activities by the floor area | agreements during the year, together | | | legally completed in the year. | with the affordable housing subsidy on | | affordable homes delivered in the year with reference to open market value. Link to strategy Link to strategy Link to strategy 2023 2023 2023 2023 2023 2023 0.27 7,629 2,136 31.01 86 560 15Berkeley Group 2023 Annual Report 2019 2019 2019 2019 2019 6,247 1.16 1,831 525 91 ## BROWNFIELD REGENERATION IN ACTION ## FULHAM REACH ## HAMMERSMITH & FULHAM Above: The brownfield site before regeneration Right: After regeneration, Fulham Reach today 16 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements 17Berkeley Group 2023 Annual Report ## CHAIRMAN’S STATEMENT Michael Dobson, Chairman | I am delighted to present this first | with which they execute the | made through share buy-backs. The | | --- | --- | --- | | Annual Report since becoming | Group’sstrategy. | amount to be paid as a dividend in | | Chairman of Berkeley in September | | September 2023 will be announced | During the past year, particularly in last year following the Annual on 10 August 2023, taking account thecontext of the current uncertain General Meeting, having joined ofany further share buy-backs in operating environment, the Board theBoard in June. theintervening period. hasfocused on our strategy and | Over the course of the past year, | whatwe can deliver for shareholders | The Board | | --- | --- | --- | | Berkeley’s uniquely long-term model | over the long-term, and the risks to | The Board of Berkeley has undergone | | has again demonstrated its resilience, | that strategy. We endorsed a business | a period of significant transition over | | with the Company achieving the full | model which is agile and able to adapt | the last three years since the passing | | year profit guidance of £600 million | to market conditions, invest in new | of the Group’s founder and Executive | | pre-tax that we provided at the start | opportunities or focus on existing | Chairman, Tony Pidgley. During this | | of the year, while maintaining our | assets and cash generation, depending | time, six directors have retired from | | programme of shareholder returns. | on the opportunities available at any | the Board and six new Directors | | We achieved this in spite of sharply | point in the economic cycle. | havejoined. I would like to thank | | increasing interest rates and high | | GlynBarker, whom I replaced as | Shareholder returns levels of cost inflation, a strong Chairman last September, for his Berkeley’s policy under our long-term performance in the context of the stewardship of the Board over this shareholder returns programme is to prevailing operating environment. period and for his service to Berkeley deliver returns of £282 million each over the previous nine years. | Purpose, culture and strategy | year (measured between 1 October | | | --- | --- | --- | | Berkeley is a deeply purpose-driven | and 30 September) through either | We currently have a Board of fifteen | | business with a clear set of values and | dividends or share buy-backs, on a | Directors, five Executives and ten | | a unique culture, which has been key | bi-annual basis in March and September. | Non-executives. Three of the Non- | | to our performance over the period | This is part of a programme which | executives will havepassed nine years | | since the start of the pandemic. | wasput in place in 2011 and which is | of service bySeptember and, in line | | | scheduled to continue until September | with best corporate governance | Throughout this Annual Report, you 2025, at which stage it will be practice, theywill retire from the will read about Berkeley’s business reviewed. The return for the twelve Board at theconclusion of the Annual model and what it is that makes months ended 30 September 2022 was General Meeting. I would like to thank Berkeley different and able to deliver completed on schedule on payment of Sir JohnArmitt, Diana Brightmore- on our commitments to all stakeholders. the September 2022 dividend. Armour andAndy Myers for their Our strategy is designed to withstand service to Berkeley. The Board has the rigours of a cyclical industry and During the course of the financial benefited greatly from their expertise to make enduring, positive contributions year ended 30 April 2023, we and judgement and they leave with to society, the economy and the natural delivered shareholder returns of our best wishes. | world, while delivering sustained, risk- | £254 million, £99 million by way of | | | --- | --- | --- | | adjusted returns for our shareholders. | dividends and £155 million through | We have decided to take this opportunity | | Our objective of building quality homes | share buy-backs, executed at an | to streamline the Board by reducing its | | and vibrant, inclusive communities is | average price of £38.25 per share. | size. We will not replace the departing | | embedded among senior management | Ofthe next bi-annual payment of | Non-executives and, in addition, three | | and all employees, and shows through | £141 million, to be paid by 30 September | Executive Directors will step down at the | | in the passion and attention to detail | 2023, £35 million has already been | end of the 2023 Annual General Meeting. | 18 Berkeley Group 2023 Annual Report Horlicks Quarter, Slough Strategic Report Corporate Governance Financial Statements | I would like to pay tribute to Justin Tibaldi, | Looking forward | Finally, Berkeley benefits from the | | --- | --- | --- | | Paul Vallone and Karl Whiteman for their | I have greatly enjoyed my first | commitment and dedication of our | | service on the Board. They continue to be | 10 months as Berkeley’s Chairman. | talented people, and to them I would | | key members of the Group’s senior | Itisan outstanding Company with | like to extend our thanks for enabling | | leadership team and will remain in their | aclear strategy for delivering value for | us to deliver another successful result | | current operational roles and as members | shareholders while, at the same time, | in the past year. | | of the Board of the Company’s immediate | making a significant contribution to | | | subsidiary, The Berkeley Group plc, with | the wider economy and society. | | Michael Dobson Rob Perrins and Richard Stearn, the In a difficult operating environment Chairman Group’s CEO and CFO and their for the industry, there is much to 21 June 2023 importance to Berkeley, internally doto retain our leadership position andexternally, will not change. and Ilook forward to working closely Following these changes, the Board withRob and the Board as we seek will comprise a Chairman, CEO, CFO tomeet current challenges and take and six Non-executive Directors. advantage of long-term opportunities as they arise. 19Berkeley Group 2023 Annual Report ## CHIEF EXECUTIVE’S ## REVIEW Berkeley has delivered pre-tax profits in line with the guidance provided at the start of the financial year, maintained our shareholder returns programme and increased thenet cash position. This is a very strong performance byour sales and construction teams, given market conditions and changing building regulations, and reflects the resilience ofBerkeley’s business model with itsfocus on the country’s most undersupplied markets. We continue to see good levels of enquiry for well-located homes built to a high standard of design and quality but recognise that the market is likely to lack urgency until there is more certainty over the trajectory ofinterest rates. Berkeley’s focus on regenerating long-term brownfield sites has drivenlasting positive change within Rob Perrins, Chief Executive some of the country’s most deprived communities and differentiates Berkeley | as the only large-scale UK developer | While well-intended, this is constraining | We remain focused on meeting our | | --- | --- | --- | | aligned with Government’s brownfield | investment into brownfield regeneration | long-term pre-tax ROE target of 15% | | first agenda. A deeper understanding | and homebuilding. If housing delivery | across the cycle and delivering against | | and recognition of the benefits of, and | is to be maintained the planning | our shareholder returns programme. At | | challenges to, this highly sustainable | system needs to respond to these | the same time, we will continue to serve | | form of development is required within | challenges and certainty is needed | our customers and the communities in | | the planning system to ensure the | inthe regulatory environment as | which we work, delivering individually | | tremendous opportunity it presents for | amatter of immediate priority. | designed, well connected, nature-rich | | society, communities and the economy | | neighbourhoods with quality new | Looking forward, we are well placed is not missed for future generations. homes across all housing tenures. tomeet our guidance for the next two The challenge is increased when financial years and continue investing setalongside the uncertainty from a in our existing regeneration sites, but continually evolving and increasingly will remain cautious in committing to burdensome regulatory environment. new investment until the conditions for growth are in place. Highwood Village, Horsham 20 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Biodiverse landscaping at Kidbrooke Village, Greenwich ### OVERVIEW OF THE Lambeth, an 8-acre brownfield site 950 delivered so far, of which 400 are which brings together four derelict affordable homes. The development ### YEARAND OUTLOOK gasholders and an adjacent supermarket won Best Regeneration Scheme at Purpose, Long-term Strategy and warehouse. We welcomed our the2022 WhatHouse? Awards. andCapital Allocation first residents to this emerging mixed Alongside this, Berkeley’s financial Berkeley’s purpose is to build quality use neighbourhood in 2022, which strategy reflects the cyclical nature and homes, strengthen communities and willgrow to provide more than 1,300 complexity of brownfield development, improve lives, using its sustained private and affordable homes and protecting and enhancing long-term commercial success to make valuable over 1,000 permanent jobs across value for shareholders and using its and enduring contributions to society, 160,000 square feet of commercial development expertise to maximise the economy and natural world. and community space. All this is set thereturns from its assets, creating the around car-free streets, public squares Berkeley is the only large UK homebuilder right development solution for each site. and biodiverse landscaping. The to align with Government on prioritising Our capital allocation policy is therefore development was awarded Housing brownfield land, as we progress 32 clear and remains unchanged: first, Scheme of the Year at the 2023 ofthe country’s most challenging ensure financial strength is appropriate Planning Awards. regeneration projects, 26 of which are to the prevailing operating environment; in delivery. Each of these neighbourhoods White City Living also made great second, invest in the business (land is uniquely designed in partnership progress in the year, where St James andwork-in-progress) at the right time; with local councils and communities has transformed an 11-acre isolated and third, make returns to shareholders and includes valuable public amenities warehouse site into a beautiful open through dividends and share buy-backs. alongside tenure-blind private and neighbourhood, with a hugely popular This disciplined approach allows affordable homes. community park, pedestrian routes to Berkeley to deliver sustainable, Westfield Shopping Centre and an It has been hugely exciting to see risk-adjusted returns over the cycle, Amazon Fresh convenience store. The more of these complex sites transform targeting a sustained pre-tax return site will deliver around 2,500 private into popular, inclusive and low carbon on equity of 15%. and affordable homes, with more than communities, including Oval Village in 21Berkeley Group 2023 Annual Report ## CHIEF EXECUTIVE’S REVIEW CONTINUED Strategy Positioning for sites very selectively or in partnership (RPDT) and proposed new Building Today’sEnvironment with landowners, such as retailers, Safety Levy, will inevitably continue From the strong trading period that utilities, local authorities and housing tosee a reduction in supply of new followed the Global Financial Crisis, associations or with its joint venture homes in London and the South East. Berkeley invested strongly in its partners. This strategy is centred on The delivery of new homes during a landholdings, which will sustain the cash generation that will provide year in which there were no new land Group’s delivery profile for the next theoptionality to invest further in additions, coupled with the transfer ten years, spending some £6 billion thebusiness or reassess the level of of5,500 plots to Berkeley’s pipeline, onits development activities in the returns to shareholders, depending offset to some degree by new planning last three years alone. We are forecast upon the characteristics of the consents and market movements, has to continue investing in our existing prevailing operating environment. led to a reduction in the land holdings regeneration sites with implementable Beyond the near-term, the current future gross margin from £8.26 billion planning consents. | | operating environment, characterised | to £7.63 billion at 30 April 2023. This | | --- | --- | --- | | In the near-term, Berkeley has a | by record levels of planning tariff within | islikely to further moderate in the | | clearstrategy to focus on matching | an increasingly complex, uncertain and | near-term as Berkeley continues to | | production on existing sites to | slow planning system, at a time of high | deliver new homes, without new | | demand and delivering its forward | build costs, increased regulation and | investment fully replacing production. | | sales whilst protecting operating | higher corporation tax, alongside the | | | margins. We will only invest in new | Residential Property Developer Tax | | Summary of Performance Outlook Berkeley has delivered pre-tax profits of £604.0 million for the year. Berkeley ends the year in a robust position with good visibility of Based upon current trading, Berkeley reiterates its guidance of delivering earnings for the next two years, pre-tax profits of at least £1.05 billion across its next two financial years underpinned by £2.1 billion of cash (FY24 and FY25) combined, which is likely to be slightly weighted to the due on secured private sales. We FY24, in line with market consensus. Operating margins are expected to have unrivalled land holdings in the beatnormal historical levels. most fantastic city in the world that Shareholder Returns suffers from a systemic under- Berkeley has in place a shareholder returns programme, based upon an supply of new homes, providing ongoing annual return of £283 million planned through to September 2025. resilience to the sales market. This is delivered through two equal tranches of £141.4 million in the six month In these uncertain times, Berkeley periods from 1 October to 31 March and 1 April 30 September each year. It is has a very clear strategy: realising measured on a cumulative basis and can be made through either dividends its forward sales; matching supply to or share buy-backs. Shareholder returns during the financial year totalled demand; adding value to its existing £253.9 million: land holdings and pipeline sites; Shareholder Returns in the year ended 30 April protecting operating margins; and focusing on cash generation ahead | | 2023 | 2022 | | | --- | --- | --- | --- | | | £m | £m | of the Income Statement. | | Dividends paid 98.5 – | | | These results underline the essential | role brownfield land has to play in B-Share capital return – 451.5 solving the housing crisis, tackling Share buy-backs undertaken 155.4 63.7 inequality and re-energising our towns and cities to meet the challenges of Shareholder return in the year 253.9 515.2 tomorrow. The delivery of new private Dividends paid during the financial year (from 1 May to 30 April) of and affordable homes on these sites £98.5 million comprised: is a force for good, generating better health outcomes, new jobs and skills, — A £23.3 million dividend in September 2022 (21.25 pence per share) which economic growth and social mobility completedthe return of £141.4 million that was due in respect of the six which benefits the whole of society. months ended 30 September 2022; and We are proud to be the country’s — A £75.2 million dividend in March 2023 (69.44 pence per share) which leading regeneration specialist and completed the return of £141.4 million that was due in respect of the six Iwant to thank our fantastic people months ended 31 March 2023. and partners for their commitment Berkeley has committed to the next ongoing scheduled shareholder return, over the last 12 months. which is £141.4 million in respect of the six months ending 30 September 2023, At a time when our colleagues, against which £35.2 million has been returned via share buy-backs to date. The customers and communities total amount returned via share buy-backs in the year is £155.4 million across continue to be faced with ongoing 4.0 million shares, at an average price of £38.25 per share. volatility in the domestic and The ongoing annual return of £283 million currently equates to £2.63 per share international economy and political compared to the initial £2.00 per share initiated in 2016. landscape, the business is well placed to continue serving all our stakeholders in the years to come. 22 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Construction activity at Oval Village ### HOUSING MARKET AND More recently we have seen expectations Berkeley has continued to sell to for the pace of reduction in inflation and bothowner occupiers and investors ### OPERATING ENVIRONMENT interest rates slow with a consequential throughout the year, with investors Sales rise to mortgage rates. The near-term benefiting from strong rental growth. Overall, the value of Berkeley’s market outlook is therefore uncertain, Cancellation rates have been in the underlying private sales reservations much the same as it has been since normal range, apart from in the couple for 2022/23 was around 15% lower September 2022. In this type of market of months after September 2022. than 2021/22 on a like-for-like basis, there is a lack of urgency and transactions The long-term fundamentals of the assuming St William had been owned typically stem from owner occupiers housing sector and, more importantly, throughout 2021/22. Berkeley’s sales with a current motivation to move or Berkeley’s core markets in London were strong during the first part of the investors with immediately available andthe South East remain compelling. financial year, slightly ahead of the funds, with demand therefore weighted Key to this are London’s position as levels secured throughout 2021/22. to product which is closer to delivery, aleading global city and the systemic However, the market weakened asopposed to off-plan sales that do under-supply in our markets. The latest markedly following the sharp rise in notcomplete for two to four years. quarterly Department for Levelling Up, interest rates in September 2022. Onthis basis, at current sales rates, Housing and Communities (DLUHC) sales for 2023/24 will be around 20% We immediately positioned the data show new starts in London for the lower than 2022/23. business for the prevailing market calendar year 2022 ofjust over 20,000 conditions, adopting a more Berkeley’s response to the rapid (including private, PRS and affordable considered approach to new sales change to market conditions is homes), which is broadly consistent launches and being more cautious on facilitated by the healthy forward with the long-run average over the last the pace of investment in our ongoing salesposition which, at £2.14 billion ten years. This is substantially below sites. We have been disciplined on at30 April 2023 (2022: £2.17 billion), both the current London Plan target of pricing, which has remained above isanticipated to moderate over the 52,000 new homes per annum and the business plan levels as we protect coming twelve months until sales Government’s identified local housing operating margins in what has been ratesreturn to more normal levels. need of 94,000 per annum. ahighly inflationary cost environment for the past two years. 23Berkeley Group 2023 Annual Report ## CHIEF EXECUTIVE’S REVIEW CONTINUED Land and Planning Construction fundedworks exceed those necessary Berkeley has not added any new sites Build cost inflation has peaked and is to remediate life critical fire-safety to its land holdings during the year, beginning to moderate, despite certain matters. It is Berkeley’s preference to while one long-term site contracted materials and trades remaining under take full responsibility for all its relevant on a conditional basis in Motspur Park pressure, particularly where energy buildings and to complete any required has been added to the pipeline. costs are a high component of the input works itself as this will speed up the cost. There is improved competition in overall process of remediation. On the planning front, Berkeley has the supply chain, especially on larger secured one new consent in the year, Government has undertaken to ensure packages, and we continue to anticipate at our site in Worthing, Sussex for that all developers and house-builders build cost inflation falling to negligible around 190 homes and has achieved are treated equally and that all parties levels by the end of the year, but anumber of revisions to existing involved in the development process remain mindful of the cost of consents in the year as we continue are held to account and pay their fair ongoingregulatory change. | toprogress our sites; most notably | | share. Berkeley believes this is fair and | | --- | --- | --- | | atThe Green Quarter (Ealing), White | We are seeing signs of some financial | equitable, is fully supportive of this | | City Living, Hartland Village (Fleet), | distress in the supply chain as contractors | approach and looks forward to seeing | | Hareshill (Crookham), The Eight | continue to deal with thetail of impacts | its implementation. By their commitments | | Gardens (Watford) and Lombard | from Brexit, the pandemic and the | under the Self-Remediation Terms | | Square (Plumstead). | ongoing conflict in Ukraine, as well as | andContract and 4% RPDT Berkeley | | | the current economic backdrop. We are | believes that UK house-builders have | The Levelling Up and Regeneration actively working with and supporting played a very full part in resolving this Billis now in its final stages, having our established supply chain partners to issue and further levies on the industry evolved as it progressed through ensure sustainability of the supply chain would be unjust and constrain delivery Parliament with a number of significant and delivery on our development sites. and innovation. We are therefore amendments tabled in December concerned that Government is still 2022. These amendments were tabled The manufacture of Berkeley Modular’s considering plans to introduce an alongside a commitment from the first modules for the urban house at additional Building Safety Levy with Secretary of State to launch a review Kidbrooke Village is complete with all the target of raising an additional into what further measures could help 96 modules installed on site. Noting £3 billion from the industry. prioritise the use of brownfield land for thedecision of other parties to exit the housing development and we look industry due to the costs and efficiency Looking forward, Berkeley is ensuring forward to seeing these. impact of regulatory and planning its procedures are compliant with new uncertainty on a stable production legislation and is supportive of the We support the core aims of the pipeline, Berkeley’s immediate focus Building Safety Act which, together Government’s reform agenda, which ison evolving the product to remove with the actions taken to date, should are to improve the quality of new cost, weight and complexity whilst restore trust and confidence to the homes and places, better engage continuing to work with the numerous housing market, enabling it to operate communities in plans for their area, statutory bodies to achieve the various efficiently, effectively and be fair for all. aswell as a renewed focus on regulatory approvals required for brownfield housing delivery. These Pace and Impact of RegulatoryChange efficient future delivery. We will not be aims do need to be balanced with We remain concerned over the extent putting the factory into full production thesocietal need for more homes and pace with which new regulation is until this is achieved. andthe wider benefits they bring. being consulted upon and subsequent Fire Safety regulatory changes are being made. Like many, we are concerned that Berkeley has been very supportive of These cover important and complex December’s proposed changes to the Government in its determination both areas, such as planning (NPPF NPPF would weaken the presumption to ensure buildings are fire-safe for revisions and the Levelling Up and in favour of sustainable development people to live in and mortgageable so Regeneration Bill), building regulations and the status of five-year land supply they can move home and re-mortgage (including new Parts F, L, O and S) targets will materially reduce the pace their properties when they wish. and carbon reduction, which have of delivery of new homes. Sadly, this Historically, Berkeley’s focus in this multiple inter-dependencies. While has already come to fruition with 55 areahas been on ensuring its buildings well-intended, all aspects must be Local Authorities pausing or abandoning achieve the required EWS 1 form fullyconsidered and balanced with their local plan making process as a certification for mortgage purposes theobjective of increasing the supply consequence of the uncertainty within and it has obtained this on 99% of its of quality new homes. The current the planning process. | | relevant freehold buildings. Further, | position is creating uncertainty and | | --- | --- | --- | | While the Government’s “brownfield | on5 April 2022, Berkeley signed | delays in the construction of much | | first” strategy is unquestionably the | thePledge Letter prepared by DLUHC. | needed homes, delays for people | | right way to deliver the homes the | | trying to move and increased barriers | On 13 March 2023 Berkeley entered country needs where they are needed to entry for SME developers. into the Self-Remediation Terms and most, the planning system is yet to Contract with DLUHC. This formalised Most recently, the consultation on recognise the challenges of this most the Pledge commitments, requiring theincorporation of second staircases sustainable form of home-building signatories to assume responsibility into buildings over 30 metres lacked andis not taking account of today’s forremediating relevant life critical detail on the technical parameters evolving regulatory environment. | fire-safety matters in buildings they | ofhow this is to be achieved and is | | --- | --- | | had constructed over the previous | requiring many tall buildings, yet | | 30years and to meet certain historic | tobeput into construction, to be | | funding commitments made by | redesigned. While the consultation | | Government, even where these | document notes that there is no | 24 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Rooftop gardens above the first completed homes at Oval Village | evidence that existing tall buildings | External recognition of our | In May 2023 we were delighted to | | --- | --- | --- | | are unsafe, it also notes that this | strategyincludes: | winManagement Today’s award for | | redesign will affect the viability of | | ‘Long-Term Business Success’ for | — A- Leadership rating for Climate certain buildings, which will result demonstrating long-term growth not Action and Transparency from CDP; inlower levels of affordable housing. just in financial terms, but culture, — Prime status from the ISS ESG values and product. The cross-sector Corporate Rating which is reserved for ### OUR VISION 2030: judging panel said Berkeley was a “industry leaders who fulfil demanding ### TRANSFORMING TOMORROW “worthy winner”, praising the emphasis performance expectations”; and commitment to measuring and Our Vision 2030 is Berkeley’s ambitious — Low risk rating with Sustainalytics; improving customer satisfaction, as long-term strategy, which sets 10 — AAA MSCI rating held for more well as a strong commitment to ESG. | strategic priorities for the business | thanfive years; and | | --- | --- | | overthe current decade. It is designed | — Continual FTSE4Good Index listing | | todrive our performance, spur | since 2003. | innovation and reinforce our position asthe country’s most sustainable developer through maximising our positive impacts on society, the economy and the natural world. 25Berkeley Group 2023 Annual Report ## CHIEF EXECUTIVE’S REVIEW CONTINUED | Delivering for Our Customers | continued to improve our understanding | the pressures onthe environment are | | --- | --- | --- | | Our independently verified Net | and the data accuracy of these impacts, | greatest andwhere we can have most | | Promoter Score (NPS) of +79.2 | including undertaking detailed | impact climate, pollution, ecology and | | significantly outperforms the industry | life-cycle assessments of individual | water. This year, our Royal Exchange | | average of 42 (HBF, March 2023). | buildings to identify materials and | development in Kingston upon Thames | | 97.5% of our customers said they | processes which drive embodied | is believed to be the first of itskind | | would ‘recommend us to a friend’ | carbon. We have used this data to | toachieve water neutrality inatrial | | in2023. We retain the Investor in | create internal guidance on how to | completed with Thames Water | | Customers Gold rating and this year | design-out these emissions from future | throughretrofitting and upgrading | | won In-House Research’s Outstanding | developments and set quantitative | local businesses, homes and schools. | | Achievement Award. | reduction targets to drive progress. | | Developing Skills for the Future This pioneering approach to tackling From exceptional service to the andaWorking Environment Where embodied carbon was recognised quality of our homes, we aim to PeopleCan Thrive with the Carbon Reduction Award delight our customers in every last During the year Berkeley released atthe National Sustainability Awards detail. This year, our customers anew competency framework for in October 2022. | reported that 60% of our homes had | | ourpeople to ensure that we are | | --- | --- | --- | | zero defects, compared to only 5% of | Berkeley continues to implement | training and upskilling our workforce | | homes on average across the industry | therequirements of the 2021 | to meet evolving needs. Our in-house | | (HBF, March 2023). On average, our | BuildingRegulations (effective June | Berkeley Academy, which is an | | customers report fewer than three | 2022 with a 12-month transitional | Approved Training Organisation by | | defects which reflects our detailed | arrangement) through a fabric-first | the Construction Industry Training | | handover checks, underpinned by our | design approach in combination with | Board (CITB), has delivered 4,400 | | build quality assurance arrangements, | the most appropriate technology and | trainer hours in the year to upskill | | with robust training and audit | infrastructure solution for each site. | ouremployees. | | programmes in place. | We continue to engage with industry | | This year we have developed a new on this important topic, particularly Driving Ambitious Climate Action People Framework that fosters a through the UKGBC’s Advancing Tackling climate change has been a positive working environment defined NetZero Programme and the Future priority for Berkeley since 2007 and by respect, support, wellbeing, safety Homes Hub. | we are proud to be a 1.5 degree | | and inclusivity. This is supported by | | --- | --- | --- | | aligned business working towards | Supporting Nature’s Recovery | our approach to Equity, Diversity | | validated science-based targets | As the first homebuilder to commit to | andInclusion (EDI), which set out | | (SBTs) for reducing our emissions. | delivering a measurable biodiversity | anumber of action areas including | | | net gain on every new site back in | strong leadership, awareness, | We are pleased to report that we have 2017 we were delighted to co-host the allyshipand celebration. Our efforts achieved our absolute scopes 1 and 2 industry-wide Biodiversity Conference are particularly focused on women, (market-based) emissions target well in March 2023 with Natural England ethnicity, disability and LGBTQ+ and ahead of the 2030 target, exceeding and the Local Government Association. work alongside our commitments to our 50% reduction target with a 76% This aimed to prepare developers and social mobility. We are pleased to have decrease since the baseline year of local authority professionals for the expanded our partnerships to support 2019. This reduction has largely been forthcoming mandatory requirement our progress in this area with pledges driven by a transition to the use of for biodiversity net gain from autumn to the Race at Work Charter and biodiesel HVO (Hydrotreated 2023 and was attended by more than Disability Confident employer scheme. Vegetable Oil) on our construction 500 delegates from across the public, This year 31% of managers are female, sites, with 95% of fuel directly private and voluntary sectors. together with 37% of our employees. purchased for use in the year being this low carbon alternative. Since we set our commitment in May Berkeley is pleased to have been 2017 all new planning applications awarded Gold member status of The We have purchased 100% renewable have committed to a biodiversity net 5% Club, and this year have exceeded electricity in the UK since May 2017, gain, with each site targeting a gain in our pledge with 10% of our workforce backed by Renewable Energy excess of 10% since May 2021. Overall, consisting of ‘earn and learn’ roles Guarantees of Origin (REGOs). 54 sites have committed to an on site including apprentices, graduates Wevoluntarily offset the remainder of biodiversity net gain, which together andsponsored students. On average, our scopes 1 and 2 emissions through are set to deliver more than 550 acres we have had 160 direct apprentices certified schemes. This year our offset of new or measurably improved and 70 graduates throughout the payments have supported the new natural habitats. These natural yearandare now listed 16th in RetrofitCredits programme which landscapes are all being delivered TheJobCrowd’s Top 50 Graduate utilises funds to decarbonise existing onour development sites rather than Employers in the country. UK affordable housing through the off-site, helping to improve the areas installation of energy efficient Championing Safer Homes in which we work and to connect our measures such as improved insulation. andOperations customers and future residents with Our Annual Injury Incidence Rate for We recognise that our most significant nature at their doorstep. the year is 79 per 100,000 people, impacts, around 99%, occur across We continue to evolve our approach compared to an industry average our value chain (scope 3), including tobiodiversity net gain to include an of326 (HSE, October 2022). We the activities of our supply chain even more challenging and valuable continue to target zero harm on (‘embodied carbon’) and the energy combination of measurable environmental everysite, as we champion health used by our customers in homes once benefits. Our approach to ‘environmental andsafety for every employee and sold (‘low carbon homes’). We have net gain’ will focus onfour areas where contractor working with us. We 26 Berkeley Group 2023 Annual Report | wereproud to have once again | half of our workforce choosing to get | The Foundation also launched a | Strategic Report Corporate Governance Financial Statements | | --- | --- | --- | --- | | beenrecognised byRoyal Society for | involved in the Foundation’s work over | number of new partnerships, including | | | the Prevention of Accidents (RoSPA) | the last 12 months. We have offered | a new three-year partnership with | | | in 2023,winning the Construction | work placements and job opportunities, | Groundwork London, supporting | | | Housebuilding and Property | held careers days to help young people | young people to kick-start their | | | Development Industry Sector award. | about to start their journey into | careers in the green economy through | | | | employment, and shared our expertise. | ayouth leadership programme. | | We aim to extend our influence | beyond our direct operations and to | Over the year, the Foundation | | | --- | --- | --- | | make new homes safer places to live, | contributed £3.9 million to its charity | Rob Perrins | | especially for young children and the | partnerships and programmes through | Chief Executive | | elderly. Following the co-writing of | grants and staff fundraising and Give | | | RoSPA’s Safer by Design framework, | As You Earn. Highlights include the | | | we have now rolled this out as standard | commitment of a further £300,000 for | | | for all new sites and achieved Gold | the second year of the Foundation’s | | | status for 17 developments. | three-year £900,000 Resilience Fund, | | aiming to help small to medium sized The Berkeley Foundation charities and Community Interest (‘Foundation’) Companies to develop their organisational The Foundation continues to be resilience – whether through improved deeply embedded at Berkeley and governance, strengthened people during the year launched a new power, better financial planning or Volunteering Hub, encouraging more stronger systems and strategies. 10 new employees to volunteer their time. organisations will receive these funds Ouremployees organised 26 major over two years, alongside a programme fundraising events and donated of learning and development support. through payroll giving, with more than The Street Elite Festival in Lambeth 27Berkeley Group 2023 Annual Report London and the South East is systemically under-supplied ## MARKET The Government’s long-term annual delivery target of 300,000 homes peryear has only ever been achieved ## OVERVIEW six times, all during the 1960s, when Government directly delivered 1 around40% of all new build homes. Whilst remaining committed to this annual target, the Government is ### The housing market is sensitive to underlying sentiment consulting on an update to the National ### and the prevailing macro-economic environment. It is Planning Policy Framework, which is ### therefore cyclical in nature, andBerkeley is experienced adding uncertainty to an already protracted planning environment. ### atoperating in this environment, with a unique long-term ### business model that enables us to deliver homes and During 2022/23, the number of new homes completed across England was ### outcomes for all stakeholders through market cycles. around 247,000, a 6% increase on the 233,000 delivered in 2021/22, a year Over the last year, consumers have — although interest rates have which had benefited from delayed been impacted by sustained double increased rapidly during the completions from the prior pandemic | digit inflation, with the Bank of England | lastyear, the future anticipated | | 2,3 | | --- | --- | --- | --- | | | | impacted year. | However, this is still | | responding by increasing interest rates. | trajectory appears to be settling; | | | some way below the Government’s ambition, and compounds the national The sector has also continued to — a competitive lender marketsupports under supply issue. Forecasts for the navigate the supply chain challenges good mortgage availability; 4 coming years are significantly lower, around build cost inflation and material — affordability levels remain within driven by low starts and evolving and skilled labour shortages driven historical parameters for those policy changes. bythe compounding effects of the withthe requisite deposit, albeit pandemic recovery, post-Brexit changes Based upon the Government’s most with interest costs having risen and the ongoing Ukraineconflict. 5 recent assessment of housing need, inthe last year; and this under supply continues to be Following sharp rises to mortgage — strong growth in the rental market concentrated in London and the ratessince the end of September 2022, means home ownership is a viable SouthEast (see figure 1). the mortgage market appears to preference and investors can achieve bestabilising during the early part appropriate yields, supporting the of2023, but it remains to be seen much needed rental market. howthis translates into the broader contextof mortgage availability andaffordability constraints, sales Figure 1 – Regional housing supply prices and demand recovery. Construction activity has been resilient 2021/22 (net additions) through the last year. However, a 2022/23 (EPC data) 80,000 number of emerging legislative changes Housing target may impact future housing supply unless Berkeley's core markets there is a clear and definitive approach 60,000 to parameters, technical specification and transitional arrangements, which will provide certainty to all stakeholders. 40,000 The current operating environment, characterised by persistent inflation, 20,000 higher interest rates and economic uncertainty, alongside the evolving regulatory landscape are adversely 0 East of East London North North South South West weighing on both supply and demand. England Midlands East West East West Midlands the Humber Importantly, the fundamentals of the housing sector and Berkeley’s core Figure 2 – Construction starts activity markets in London and the South East +29% remain strong: 175,000 35,000 — London’s position as a global city remains compelling; 150,000 30,000 — systemic under supply in London 25,000 125,000 | 100,000 | and the South East of England, | | | | | --- | --- | --- | --- | --- | | 200,000 | | | 40,000 | | | | | 100,000 | | 20,000 | having compounded further in recent years; 75,000 15,000 — unemployment levels remain at 50,000 10,000 historically low levels, despite the | economic uncertainty; | 25,000 | | | | | | | | | | 5,000 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | -21% | Pandemic | | | | | | | | 3% levy announced | | | | | & recovery | | | | | | 0 | | | | | | | | | 0 | | | | 2007 | 2010 | 2012 | 2014 | 2016 | 2018 | | 2020 | 2022 | | | | | Q4 | Q4 | Q4 | Q4 | Q4 | Q4 | | Q4 | Q4 | | England Starts (rolling 12 months) London Starts (rolling 12 months) 28 Berkeley Group 2023 Annual Report Yorkshire and London Starts (RHS)England Starts (excl. London) London’s housing need was last Figure 3 – Transaction volumes 5 estimated at 94,000 homes per year. -8% However, the current London Plan has an annual housing delivery target of 52,000 homes. Even if this target were 1,000,000 200,000 reached, this would still represent a shortfall of 42,000 homes or around Strategic Report Corporate Governance Financial Statements 750,000 150,000 45% relative to London’s assessed housing need every year. 500,000 100,000 In 2021/22, there were 37,000 homes delivered in London, of which nearly 32,000 were new build.² The delivery 250,000 50,000 in 2022/23 is expected to be broadly | | | | -18% | Pandemic | | | --- | --- | --- | --- | --- | --- | | similar,³ a 60% shortfall compared to | | 3% SDLT levy imposed | | & recovery | | | | 0 | | | | 0 | need. Annual delivery has only once 2006 2008 2010 2012 2014 2016 2018 2020 2022 exceeded 40,000 this century,² Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q4 illustrating the ever-compounding shortfall in London. significant additionality beyond their — Ensure changes to the regime The situation is similar in the South East, direct purchases. ofplanning tariffs and land value which has a housing need assessment capture proposed under the of 50,000 homes per year,⁵ compared Setting the conditions for growth Infrastructure Levy supports to average completions of 40,000 per As Government seeks to improve the development on brownfield as year over the last five years,² an annual UK’s economic growth, increasing wellas greenfield land, and ensure shortfall of 10,000 homes (20%). housing delivery in a sustainable that it does not create a penalty manner can and should play a leading This supply constraint in London forcompanies that invest in the role. When individual homebuyers, looks set to continue in the medium quality of the built environment investors, and developers like Berkeley to long-term, with new build starts thatwill endure for decades. have the confidence and ability to ataround 20,000 per annum (see invest for the long-term, this supports — Reform property taxation, moving Figure 2).⁶ significant economic activity, improves away from transaction taxes that On a national basis, the issue is equally social mobility, and permanently constrain housing and labour mobility acute. Starts volumes have recovered increases the country’s asset base. and setting a proportionate approach well post-pandemic and appear to to stimulate activity through lower Whilst Berkeley supports the have stabilised at around 160,000 per rates at all levels. Initial lost revenue Government’s overarching public annum (excluding London), the highest tothe Treasury would be more than 6,7 policy objectives and recognises that level since 2007. When combined offset by greater economic activity these require regulation, this needs with London delivery, the volume of arising from increased activity in both tobe appropriate and proportionate, starts remains just over half the the new build and secondhand markets. with a clear objective to avoid the Government’s national target. unintended consequence of lower — Increase the amount of direct Transaction volumes sector investment. Berkeley believes Government investment in Transaction activity recovered as the the following actions will help support affordable housing, assisting country emerged from the pandemic. sustainable economic growth: withthe private sector’s efforts to Current transaction levels both nationally replicate historical record delivery — Create a separate planning and in London are at a five year high levels achieved in tandem with categoryfor brownfield (c.750,000 and c.100,000 per annum significant Government involvement. | | 8 | development, with differing | | | --- | --- | --- | --- | | respectively), | assisted by pent up | | | | | | leviesand planning tariffs which | — Retain appropriate housing delivery | demand created during the pandemic. appropriately reflect the more targets and ensure changes to the The recent changing economic landscape complex nature and higher National Planning Policy Framework has adversely impacted this recovery capitalinvestment required for appropriately addresses the inthe latter part of 2022. suchdevelopment. High quality shortcomings of the existing system, Transaction taxes have a significant development on brownfield which will result in the building of impact on volumes. landcontributes hugely to local more high quality, well designed communities and social and andbeautiful homes in the most Temporary SDLT cuts in recent periods economic infrastructure, ensuring undersupplied markets. have demonstrated the positive impact under-utilised and often redundant a more permanent rationalisation of the — Adopt affordable housing policies land can be benefited from in a SDLT regime could have on housing that are not on a regimented sustainable way, introducing new market activity. The introduction of the proportional basis. If overall activity amenities and public space in 3% SDLT levy on additional properties was increased, a greater absolute conjunction with new homes. in 2016 initiated a downward trend in volume of affordable housing would transaction volumes, exacerbated in — Refocus attention on increasing be deliverable, together with the London (see Figure 3). thesupply of homes on brownfield wider benefits of increased 1,250,000 250,000 land by recognising investment residential development. Such investment (including some inthebuilt environment as the overseas purchasers, who have also investment that it is and replicate been impacted by the introduction theinvestment incentives given for ofafurther 2% SDLT surcharge) is plant and machinery to investment acrucial element of new housing inbrownfield urban regeneration, supply. They typically invest early in Sources: (1) DLUHC Live Table 244; allowing full expensing of costs on the development cycle, which allows (2)DLUHC EPC data; (3) DLUHC Live brownfield housing delivery. This will Table118; (4) HBF; (5) DLUHC Indicative developers and their funders to bring build more homes, and raise more tax Local Housing Need (December 2020); forward larger and more capital revenue in the medium to long term. (6)DLUHC Live Table 253a; (7) DLUHC intensive developments, thus creating LiveTable 213; (8) Land Registry England Starts (rolling 12 months) London Starts (rolling 12 months) 29Berkeley Group 2023 Annual Report LondonEngland (excl. London) ## TRADING AND FINANCIAL REVIEW ### Trading Performance Berkeley has remained cash positive ### Taxation on a net basis throughout the year. Revenue of £2,550.2 million in the Interest earned from gross cash The Group has an overall tax year(2022: £2,348.0 million) arose holdings slightly outweighed the chargeof £138.3 million for the year primarily from the sale of new homes interest cost of borrowings, with the (2022: £69.1 million) and an effective in London and the South East. This net finance costs of £10.6 million for tax rate of 22.9% (2022: 12.5%). The included £2,508.3 million of residential the year (2022: £12.5 million) arising Group manages its tax affairs in an revenue (2022: £2,302.0 million) and due to amortisation of borrowing fees open and transparent manner with £41.9 million of commercial revenue and imputed interest on land creditors. the tax authorities and observes all (2022: £46.0 million). applicable rules and regulations in The taxation charge for the year is 4,043 new homes (2022: 3,760) the countries in which it operates. £138.3 million (2022: £69.1 million) weresold across London and the Factors that may affect the Group’s atan effective tax rate of 22.9% South East at an average selling tax charge include changes in tax (2022: 12.5%), which incorporates priceof £608,000 (2022: £603,000) legislation and the closure of open theadditional 4% Residential reflecting the mix of properties sold tax matters in the ordinary course PropertyDeveloper Tax (RPDT) inthe year. ofevents. andthe increase to corporation tax The gross margin percentage is 27.3% from 19%to 25% from 1 April 2023. Total tax paid (2022: 28.3%), reflecting the mix of (year ended 30 April 2023) Pre-tax return on equity for the year developments on which homes were is18.7% (2022: 17.5%), in line with completed in the year. Overheads of Berkeley’s objective of delivering £178.5 million (2022: £156.9 million) asustainable 15% through the cycle. include St William overhead following | the acquisition in March 2022. The | Basic earnings per share has increased | | | --- | --- | --- | | operating margin has decreased to | by 2.1% from 417.8 pence to 426.8 | £216.4m £273.8m | | 20.3% (2022: 21.6%), which is within | pence, which takes account of the | | | the historic range. | buy-back of 4.0 million shares at | | acost of £155.4 million under the Berkeley’s share of the results of joint Shareholder Returns Programme. ventures is a profit of £96.3 million (2022: £56.1 million), with St Edward’s profits arising predominately from completions at Royal Warwick Square Corporate Tax £133.7m and Millbank. SDLT £13.6m PAYE £76.6m | | 2023 | 2022 | Change | | | | | --- | --- | --- | --- | --- | --- | --- | | Year ended 30 April | £m | £m | | £m % | Employees’ NI £18.3m | | | Revenue 2,550.2 2,348.0 +202.2 +8.6% | | | | | Employers’ NI | £31.6m | For the year ended 30 April 2023, the Gross profit 696.8 664.8 +32.0 +4.8% total tax contribution to the UK Treasury Operating expenses (178.5) (156.9) -21.6 +13.8% was £273.8 million; split between taxes borne by Berkeley of £178.9 million Operating profit 518.3 507.9 +10.4 +2.0% (corporation tax, employer’s NIC and SDLT) and taxes borne by our employees Net finance costs (10.6) (12.5) +1.9 of £94.9 million (PAYE and employees’ NIC). This total tax contribution does not Share of joint ventures 96.3 56.1 +40.2 include the indirect tax contribution paid by Berkeley’s suppliers and customers. Profit before tax 604.0 551.5 +52.5 +9.5% The wider indirect tax impact is set out on page 55. Pre-tax return on equity 18.7% 17.5% +1.2% Earnings per share – basic 426.8p 417.8p +9.0p +2.1% Hareshill, Fleet 30 Berkeley Group 2023 Annual Report Financial Position The increase in land not under (2022: £800.7 million), with the latter’s Strategic Report Corporate Governance Financial Statements development in the year arises increase represented by the completion The Group’s net assets increased primarily from the completion during of the St William sites noted above. Of by£196.2 million during the year to May and June of a further 11 sites into the total £900.7 million land creditor £3,332.3 million (2022: £3,136.1 million). | | St William as part of the transaction | balance,£37.3 million is short-term | | --- | --- | --- | | Inventory | inMarch 2022, which are represented | and£863.4 million is spread over | | Inventories of £5,302.1 million include | by land creditors. There is one further | thefollowing nine years. | | £927.1 million of land not under | StWilliam site which will complete | | Creditors also include provisions development (2022: £738.1 million), in2025. No sites have been moved of£193.6 million (30 April 2022: £4,249.2 million of work in progress into production during the year. £161.0 million) which represents (2022: £4,255.1 million) and Creditors post-completion development £125.8 million of completed stock Total creditors of £2,867.4 million include obligations, including those related (2022: £140.8 million). £921.3 million of on-account receipts tobuilding fire-safety matters, from customers (2022: £931.4 million) andother provisions. and land creditors of £900.7 million 2023 2022 Change Summarised Balance Sheet as at 30 April £m £m £m Non-current assets 394.9 374.6 +20.3 Inventories 5,302.1 5,134.0 +168.1 Debtors 92.3 150.2 -57.9 Creditors (2,867.4) (2,791.6) -75.8 Capital employed 2,921.9 2,867.2 +54.7 Net cash 410.4 268.9 +141.5 Net assets 3,332.3 3,136.1 +196.2 Shares, net of treasury and EBT 107.5m 111.3m -3.8m Net asset value per share 3,101p 2,818p +283p | Net cash | £3,332.3 million (2022: £3,136.1 million) | 3.8 million shares comprises two | | --- | --- | --- | | The Group ended the year with net | primarily due to the profit after tax for | movements: | | cash of £410.4 million (30 April | the year of £465.7 million outweighing | | — The 4.0 million share buy-backs 2022: £268.9 million), an increase of the shareholder returns of £253.9 million undertaken during the year for £141.5 million during the year (2022: (comprising £155.4 million share buy £155.4 million (£38.25 per share); net decrease of £859.3 million). backs and £98.5 million dividends) and and other movements in reserves of The net cash of £410.4 million consists — The issue of 0.2 million shares £15.6 million. of gross cash holdings of £1,070.4 million, underthe 2011 LTIP. net of £660.0 million of long-term The shares in issue, net of treasury Consequently, the net asset value borrowings. andEBT shares, closed at 107.5 million pershare is 3,101 pence, up 10% from compared to 111.3 million at the start Net assets and NAVPS the 2,818 pence at 30 April 2022. ofthe year. The net reduction of Net assets increased over the yearby£196.2 million, or 6.3% to 2023 2022 Abridged Cash Flow for year ended 30 April £m £m Profit before taxation 604.0 551.5 Taxation paid (133.7) (142.6) Net investment in working capital (50.1) (132.6) Net investment in joint ventures (33.0) (82.8) Other movements 8.2 3.0 Shareholder returns (253.9) (515.2) Acquisition of St William – (540.6) Increase/(decrease) in net cash 141.5 (859.3) Opening net cash 268.9 1,128.2 Closing net cash 410.4 268.9 31Berkeley Group 2023 Annual Report ## TRADING AND FINANCIAL REVIEW CONTINUED ### Funding The net £33.0 million increase in the Land Holdings and Pipeline year arises from Berkeley’s 50% share The Group’s borrowing capacity of Berkeley’s land holdings comprise of three movements: | £1,200 million is unchanged over the | | 58,045 plots at 30 April 2023 | | --- | --- | --- | | course of the year and comprises: | — Profits earned in joint ventures of | (2022: 66,163 plots), including | | | £96.3 million; | theStEdward joint venture. The | — £400 million unsecured 10-year — Dividend distribution from threesites (3,165 homes) that were Green Bonds which mature in StEdward of £74.9 million; and contracted on a subject to planning August 2031 at a fixed coupon — Cash contributions (loans) to site basis at 30 April 2022 have been of2.5% per annum; and specific joint ventures of transferred to the pipeline during the — £800 million bank facility, including £11.6 million. year to reflect the long-term nature a £260 million Green Term loan and ofthese sites, particularly in the a £540 million undrawn revolving In St Edward, 594 homes were current planning environment. credit facility (RCF). completed in the year at an average selling price of £885,000 (2022: 303 Consequently, all of the current In February 2023, Berkeley exercised homes at £898,000). The completions landholdings of 58,045 plots the first of two one year extensions occurred at Royal Warwick Square across73sites that are owned and onits £800 million bank facility, which and Millbank in London, Hartland included on the Balance Sheet of the extended the term thereof to February Village in Fleet, Green Park Village in Group orits joint venture. Berkeley 2028, with one remaining extension Reading and Highcroft in Wallingford. started the year with 86 owned sites option available. (62,998plots). During the year no In total, 2,435 plots (30 April Berkeley has allocated the proceeds newsites have been acquired on an 2022: 5,317 plots) in Berkeley’s land of the Green Bonds and Green Term unconditional basis, while nine sites holdings relate to five St Edward Loan to its ongoing development have finished and four owned sites developments, two in London activities in accordance with its Green have been transferred to the long- (Westminster and Kensington) and Financing Framework (available on term pipeline. three outside the capital (Reading, itswebsite). Fleet and Wallingford). The pipeline comprises approximately With total borrowings of £660 million, 14,000 plots across 14 sites at The majority of homes on the two the Group’s gross cash holdings of 30 April2023 (2022: 8,000 plots on sites in London are expected to around £1.1 billion are placed on 6sites). The increase during the year complete in the year ending 30 April deposit with its relationship banks. comprises the transfer from the land 2024, following which the three sites holdings of the four owned and three outside London remain under ### Joint Ventures conditionally contracted sites, as development. During the year, two Included within non-current assets noted above, as well as the addition sites without planning in Brentford areinvestments in joint ventures ofa long-term site in Motspur Park and Guildford, both contracted on accounted for using the equity which has been conditionally aconditional basis, have been method which are at £223.4 million contracted in the year. transferred to the long-term pipeline at30 April 2023 (2022: £190.4 million). as these are subject to a call-in and appeal process, respectively. Land holdings as at 30 April 23 Change 30 April 22 Owned 58,045 -4,953 62,998 Contracted – -3,165 3,165 Plots 58,045 -8,118 66,163 Sales value £29.2bn -£1.9bn £31.1bn Average selling price (ASP)* £508k +£17k £491k Average plot cost* £50k -£2k £52k Land cost (%) 9.8% -0.8% 10.6% Gross margin £7,629m -£629m £8,258m GM% 26.2% -0.3% 26.5% * Reflects joint venture sites at 100% 32 Berkeley Group 2023 Annual Report The plots in the land holdings at The status of the 73 owned sites is: — 9 sites (plots: 5,409) do not have Strategic Report Corporate Governance Financial Statements 30 April 2023 have an estimated aplanning consent. — 51 sites (plots: 42,748) have an future gross profit of £7.63 billion implementable planning consent The estimated future gross margin (30 April 2022: £8.26 billion), which and are in production; represents management’s risk- includes the Group’s 50% share of — 13 sites (plots: 9,888) have a consent adjusted assessment of the potential theanticipated profit on St Edward’s but are not in production, in some gross profit for each site, taking joint venture developments. | | cases as they are not yet | account of a wide range of factors, | | --- | --- | --- | | This is a net reduction in gross profit | implementable, due to practical | including: current sales and input | | of £0.63 billion over the course of the | technical constraints and challenges | prices; the political and economic | | year. With over £0.8 billion of gross | surrounding, for example, vacant | backdrop; the planning regime; | | profit taken through the Income | possession, CPO requirements or | andother market forces; all of | | Statement (including St Edward | utilities provision; and | whichcould have a significant | | share), the value added through new | | effecton the eventual outcome. | planning consents and other market movements has more than offset the The Strategic Report on pages 02 to 101 was approved by the Board impact of the seven sites which have andsigned on its behalf by: transferred to the pipeline. The estimated future gross margin is26.2% (2022: 26.5%), a resilient position in the context of the operating and macro-economic environment. Rob Perrins Chief Executive 21 June 2023 Woodhurst Park, Bracknell 33Berkeley Group 2023 Annual Report ## BROWNFIELD REGENERATION IN ACTION ## THE GREEN QUARTER ## EALING Above: Southall Gasworks in use as a Heathrow car park before regeneration Right: After regeneration, The Green Quarter today 34 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements 35Berkeley Group 2023 Annual Report ## RESPONSIBLE BUSINESS ## AT A GLANCE ### The Berkeley Group has an established approach to ### responsible business. We define this as the holistic ### waywemanage the business that takes into account ### economic, social and environmental value. | AN INTEGRATED | AMBITIOUS | | --- | --- | | STRATEGY FOR ESG | GOALS | | Our Vision 2030 provides a framework | Through Our Vision 2030 we | | for how we address Environmental, | strivetogo above and beyond | | Social and Governance (ESG) issues. | typical requirements. | Itincludes topics such as sustainability, ## PAGES 38 TO 54 Each priority includes a long-term health and safety and build quality, goal and is supported by an Our Vision 2030 is our ambitious and encompasses our approach underlying action plan with short, strategy for the business. It centres withanumber of stakeholders such medium and long-term targets and on 10 strategic priorities that we will ascustomers, employees and the aset of core KPIs which we use to focus on over a decade, helping to supply chain. measure outcomes and impacts. drive our continued success, whilst 2023 marks the end of the short-term setting us apart and maximising the period, and we are now moving into positive impact we make. the medium-term implementation phase of our strategy. | TACKLING | STRONG | EMBEDDING IT | | --- | --- | --- | | MATERIAL ISSUES | GOVERNANCE | DAY TO DAY | | A materiality assessment was | Our Vision 2030 is overseen by a | Our Vision 2030 is underpinned | | undertaken in 2020 based on | teamat Group level and managed by | bydetailed policies, standards | | international best practice from the | anetwork of subject matter experts | andmanagement systems in areas | | Global Reporting Initiative (GRI) to | across the business. Monthly Board | such assustainability and health and | | help identify the priorities. It included | meetings are held with the CEO, CFO | safety to set a clear framework for all | | extensive research, together with | and Heads of Responsible Business | teams within each of our autonomous | | input from more than 40 internal | andSustainability.We use the existing | businesses to follow. | | andexternal stakeholders. | network of Group committees (see | | See page 78 for more information page 121) to embed Our Vision 2030, Scan the code for more information onour policies. drive progress and communicate on on ourmateriality study. the priorities. ## A SUSTAINABLE Sustainalytics | BUSINESS | Low risk rating | | --- | --- | | We take action to reduce the | FTSE4Good | | long-term impacts of both our | Listed since 2003 | operations and the places we build. CDP 2022: Climate Change Financial Times A- Leadership score In addition to Communities, Climate Climate Leader 2023 Action and Nature contained within Our Vision 2030, our Sustainability Standards and management systemcover resource use and environmental management. Scan the code to find out more about our ISS ESG Corporate Rating 2023 MSCI ESG Rating 2022 approachtosustainability. Prime status AAA 36 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements ## CLIMATE ACTION OUR ROUTE TO NET ZERO ## AND DISCLOSURE PAGES 46 TO 47 ## PAGES 44 TO 45 We are currently developing a Net Zero Transition Plan in line with the recommendations published by the Transition Plan Taskforce (TPT). We aim to play our part in tackling Weareusing the guiding principles to set out our journey towards the global climate emergency and beinganetzero business. have a robust strategy in place to take action, which includes science- based targets (SBTs) validated by the Science Based Targets initiative (SBTi). e/100 sq m) 2 2030 NEAR-TERM SBTS ### 40% Targeted trajectory reduction NET ZERO TARGET ### >90% reduction Predicted imp act based Predicted imp act based on onBuil ding Re gulations Building Regulations chang es and o ur internal chang es and o ur internal targets for red ucing targets for red ucing Residual emissions Carbon intensity by legally completed floor area (tCO embodied carbon embodied carbon offset 2019 2020 2021 2022 2023 2026 2030 2040 ## THE BERKELEY HUMAN RIGHTS OUR PEOPLE ## FOUNDATION PAGE 53 PAGE 50 ## PAGES 56 TO 57 We are taking action to combat We are striving to create a positive labourabuse and modern slavery, working environment for our people. We established the Berkeley Foundation guided by international standards 10% of our employees are in ‘earn and in 2011 as an independent charity setby the United Nations (UN) and learn’ positions and we are proud to tosupport young people and their the International Labour Organization be a Gold Member of The 5% Club. communities. It is funded by Berkeley (ILO). This year we have focused on Within the year we have developed and our employees volunteer their raising awareness with our teams and our approach to Equity, Diversity and time, expertise and money to support strengthening our due diligence process Inclusion (EDI). We have expanded the Foundation’s charity partners. for contractors and manufacturers. our external partnerships to provide a framework against which to make Scan the code progress, including the Race at Work toread our Modern Charter and Disability Confident Slavery Statement. employer scheme. ## MONITORING NON-FINANCIAL ## AND DISCLOSING AND SUSTAINABILITY ## INFORMATION We monitor metrics across a We support the recommendations of ## broadrange of ESG indicators. STATEMENT the TCFD and report in line with these. ## Our ESG Performance PAGE 78 Read more on pages 62 to 77. Pages 58 to 59. We voluntarily report in accordance ## SECTION 172(1) with the Sustainability Accounting ## Standards Board (SASB). STATEMENT AND ## Read more on STAKEHOLDER pages 60 to 61. ## ENGAGEMENT ## PAGES 79 TO 83 37Berkeley Group 2023 Annual Report ## OUR VISION 2030 ## STRATEGY AT A GLANCE ## 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 ### Customers Quality Communities Climate Action Nature Put our customers Lead the industry Transform underused Play an active role in Create a biodiversity atthe heart of our inproducing land into unique, tackling the global net gain and make decisions and provide high quality, safe wellconnected and climate emergency by ameasurable an industry leading homes for all. welcoming places creating low carbon, contribution to the Long-term goal home buying where people and resilient homes. natural environment Read more experience. communities can thrive on every development. onpage41. Read more for the long-term. Read more onpages44 to 47. Read more onpage40. Read more onpages48 to 49. onpages42 to 43. Maintaining the trust, Creating unique We believe that We believe every We want to play a loyalty and advocacy homes and places holistic placemaking business has a duty lead role in nature’s of our customers oflasting quality can strengthen totackle the global recovery and to a priority? isfundamental to isfundamental communities and climate emergency create more beautiful, Why is this ourbusiness model toourbrand, make a lasting and we want to wild and open and sets Berkeley purpose,values positive difference continue leading our spacesin the heart apart from other andworkingculture. topeople’s lives. industry in taking ofcities, towns and homebuilding brands. decisive action. our communities. — Customers — Customers — Customers — Environment — Environment — Government, — Communities & — Customers — Customers Link to regulators local government — Government, — Communities & andindustry regulators local government stakeholders andindustry — Net Promoter Score — Net Promoter Score — Affordable housing & — Greenhouse gas — Brownfield land KPIs wider contributions emissions intensity Link to — Brownfield land — Product quality — Product quality — Land availability — Climate change — Sustainability risks andcustomers andcustomers — Planning process — Sustainability — Climate change Link to — Securing sales — Securing sales — Product quality — Product quality — Product quality — Economic outlook — Build cost and andcustomers andcustomers andcustomers — Land availability programme — Sustainability — Planning process — Retaining people 38 Berkeley Group 2023 Annual Report Our business strategy sets out our We are committed to playing our Strategic Report Corporate Governance Financial Statements Scan the code vision to maximise our positive impact partinachieving the United Nations’ toread more about | through 10 strategic priorities. It is an | Sustainable Development Goals | OurVision 2030 | | --- | --- | --- | | integrated and holistic strategy, so | (SDGs).We have identified six goals | | | each priority supports the others | that we have the greatest opportunity | | | andmakes a valuable contribution | to contribute tothe achievement | | | toachieving our vision. | ofthrough the implementation of | | OurVision 2030. Read more We are delighted to have been https://www.berkeleygroup.co.uk/ awarded the Management Today investors/environmental-social-and- Business Leadership Award for Long governance. Term Business Success in May 2023 forthe impact our strategy is making. ## EXCEPTIONAL PEOPLE AND RESOURCES ## HOW WE WORK ### Employee Modernised Future Skills Supply Chain Shared Value ### Experience Production Equip our people with Build a responsible and Allocate capital to Create a positive Harness advanced the skills they need constructive supply deliver sustainable working environment manufacturing and both now and for the chain; one thatis returns to our for our people; one digital technology future, enhancing productive, practical shareholders whilst that fosters respect, tobuild more homes social mobility and and profitable, creating value for our support, wellbeing, and to achieve higher inspiring new talent sustainable, ethical other stakeholders safety and inclusivity. standards ofquality, tojoin the industry. and dependable. including through safety and sustainability. thework of the Read more Read more Read more Berkeley Foundation. onpage50. onpage52. onpage53. Read more onpage51. Read more onpages54 to 55. Our highly skilled We want to lead a step We want our people We want to maintain We want to make people are the drivers change in industry to have the skills to strong partnerships alasting positive of our success and performance to embrace innovative with our supply chain, impact, using our wewant to build address the housing technologies and sharing goals and unique operating anincreasingly need whilst harnessing working practices, collaborating to model and resources diverse, talented and the great potential while attracting a ensure we are the to fulfil our purpose productive workforce. and benefits of new newgeneration to client of first choice. and deliver value technologies. drive our growth. forall. — Employees — Customers — Employees — Supply chain — All — Supply chain — Supply chain — Supply chain — Government, regulators andindustry — Annual Injury — Direct apprentices — All Incidence Rate per and training 100,000 people — Retaining people — Product quality — Retaining people — Economic outlook — Economic outlook — Health and safety andcustomers — Build cost and — Political outlook — Political outlook — Build cost and programme — Build cost and — Regulation programme programme — Liquidity — Health and safety — Climate change — Sustainability — Sustainability — Health and safety 39Berkeley Group 2023 Annual Report ## CUSTOMERS ### Put our customers at the heart of our decisions and ### provide an industry leading home buying experience. What are we focusing on? Highlights from 2023 ### Customer — Net Promoter Score (NPS) rating of 79.2, on a scale of -100 to +100, compared to an industry average of 42. ### Experience — Recommend to a Friend score of 97.5%, against an industry average of 90%. Achieving an industry — New framework for customer communications, setting out our customer touchpoints leading home buying ateach stage and providing helpful guidance and minimum standards to our teams. experience — Weekend Director visits to each of our developments alongside dedicated director- level customer roles and regular Group-wide committee meetings. — A new suite of 11 training modules for our customer teams ranging from delivering aseamless service to managing customers’ expectations. — Improvements to our website, from the overall search experience to highlighting points of interest in the local area and travel timelines. — Signed up to the ‘Own New’ scheme allowing customers access to low deposit mortgages, whilst owning 100% of their home. ### Enhancing Key — 92% of our customers signed up to use MyHome Plus, our web-based tool containing key information and features to enable our customers to choose specifications and ### Communication receive construction updates for their new home. ### Channels and — Technology used on a site by site basis, for example digital interactive development ### Digitising the models and floorplan locators to bring the plans to life. ### WayWe Work — Extended use of video as a means to share information with and update our customers, including tours around showhomes and developments, updates from customer teams, Offering our customers demonstrations and construction progress. more options to interact — Improved digital brochures, including interactive online brochures which are designed with us digitally specifically for use on a mobile, tablet or desktop. — Enhanced content on digital and social platforms. — Increasingly using WhatsApp to ensure we are communicating with customers in the most convenient way for them. | 79.2 | 97.5% | | --- | --- | | Net Promoter Score (NPS) on a scale of | Recommend to a Friend score, | | -100 to +100, compared to an industry | compared to an industry average | | average of 42 (HBF, March 2023) | of 90% (HBF, March 2023) | Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved Net Promoter Score (NPS) ≥70. — By 2025, customers will — Provide a home beable to interact with buying experience Recommend to a Friend ≥95%. usdigitally, 24-7. that is industry ≥90% of customers using MyHome Plus. leading and which — Create an app for customers delights our customers. Refine communication to align with from the moment they start identified customer needs. toresearch their home to living in it and beyond. 40 Berkeley Group 2023 Annual Report ## QUALITY Strategic Report Corporate Governance Financial Statements ### Lead the industry in producing high quality, safe homes for all. What are we focusing on? Highlights from 2023 ### High Quality Homes — We build high quality homes where people aspire to live. We do not have any standard property types or formats, and no two Berkeley developments are the same. Instead, Implementing high quality wework with the best architects to create unique designs that meet our customers’ needs. standards and targeting — Focus on long-term building safety and high-risk areas through enhanced Build zero defects QualityAssurance arrangements. — Robust and consistent Group-wide Standards, supported by Quality Management Systems at divisional level and Quality Management Plans at site level. — Representation on the leadership team of the Construction Leadership Council (CLC), astheIndustry Sponsor for Building Safety. Read more on page 82. — Project teams supported by dedicated local quality managers, together with a Group- wide audit function. This year, 78 audits were undertaken by the independent team tocheck construction site process against our standards. — Suite of training for all production staff completed by more than 1,500 of our employees during the year. — More than 60% of our homes have zero defects, as reported by the customer, compared with 5% of homes on average across the industry. This year, more than 90%of our homes had fewer than five defects compared with 27% across industry. — Actively engaging in implementing the requirements of the Building Safety Act and thiswill be ongoing as secondary legislation is passed and released. — Signed the contract underpinning the industry pledge made last year for fire and building safety in spring 2023. — We recognise that engagement with our supply chain is critical to achieving high standards of quality and have implemented manufacturer-led training to embed bestpractice in the installation of their products. ### Safe Homes — We have had a strategic partnership with RoSPA since 2018 and were integral to the development of the voluntary industry-wide Safer by Design framework to help to Delivering homes that are reduce accidents and injuries in new homes. safer by design — 17 of our developments have now achieved Safer by Design Gold status, with many more currently completing the formal assessment process, helping to make new homessafer to live in, particularly for young people and the elderly. | >60% | 78 | | --- | --- | | of Berkeley homes have zero | Build Quality Assurance audits | | defects reported by customers, | undertaken by an independent | | compared to an industry average | Group assessment team | of 5% (HBF, March 2023) Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved | Outperform industry average for | — Deliver all homes to RoSPA’s | — Build 50,000 high | | --- | --- | --- | | customer-reported defects. | Safer by Design Gold standard. | quality homes. | | Enhanced Build Quality Assurance | — Adjust and embed processes in | | | arrangements and training. | response to the Building Safety | | Act requirements. 100% close out of quality non- conformance prior to customer handover. — Ensure appropriate competence of our people and supply chain Use technology to improve quality for building safety. management processes. — Further enhance our internal Share best practice and lessons learnt. training programme for Deliver first homes to RoSPA’s Safer buildingsafety. byDesign Gold standard. 41Berkeley Group 2023 Annual Report ## COMMUNITIES ### Transform underused land into unique, well connected and welcoming ### places where people and communities can thrive for the long-term. What are we focusing on? Highlights from 2023 ### Transforming — Taking forward 32 of the most challenging and complex brownfield regeneration sites inthe country, including former gasworks, industrial estates andmanufacturing sites. ### Underused Land — This year 86% of completed homes were on brownfield land. Progressing the transformation of our regeneration sites ### Social Value — The cost of living crisis has placed additional pressures on the communities in which wework and underlines the clear need for quality homes and social infrastructure. Delivering measurable — We have continued to individually design each development in close collaboration with long-term value on every local communities and councils, ensuring we meet specific local needs and aspirations new development to provide value to the wider community and society. — Having launched our social value tool in 2021 to help our teams assess and calculate long-term social value from our developments, we are now evolving our approach to bring together social value indicators, community needs analysis and best practice community engagement. — Hosted a health equity discussion with industry experts in November 2022 including representatives from the Institute of Health Equity, Homes England, L&Q and the Quality of Life Foundation. — Active engagement with the industry-wide Future Homes Hub Nature and Places Steering Group, and continued engagement with the Quality of Life Foundation. ### Community Plans — Continued to implement Community Plans on all of our large regeneration sites, aswellas on several of our smaller sites. Enabling thriving — Created a Communities Network to continue to upskill our teams and share best communities for the practice across our divisions and developments. long-term ### Connectivity — Continued to transform neglected, closed off land into accessible places which are integrated with surrounding neighbourhoods and offer reduced walking and cycling times. Providing the physical and — Continued to create high quality public open spaces where communities can mix, meet digital infrastructure to and enjoy access to nature. keep our neighbourhoods — Delivered 99% of homes ‘ready for service’ on customer move in day, in partnership connected with service and infrastructure providers. | 100% | 86% | | --- | --- | | of regeneration sites with residents | of new homes are constructed | | have Community Plans inplace | onbrownfield land | Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved Progress the transformation — All developments to have an — Demonstrate ofourregeneration sites. embedded Community Plan. thesuccess of ourdevelopments Embed a Community Plan at — Maximise the value to society and the quality of eachmajorregeneration site. that each development brings. lifeof our customers Calculate the social value of — Work with external experts and residents over allnewprojects. toassess people’s quality of thelong-term. lifeonnew developments. Complete research on design andinfrastructure. Provide technical and physical infrastructure to ensure digital connectivity. 42 Berkeley Group 2023 Annual Report ## A COMMUNITY-LED ## APPROACH Strategic Report Corporate Governance Financial Statements Our ambition on every site is to At Bromley-by-Bow the Grade II strengthen the local community, Listed gasholders, untouched for over support people’s health, wellbeing and a decade, have been opened up for quality of life and deliver lasting social heritage tours. Local people have value that can be felt beyond our site been invited to view the initial designs boundaries. This is what really drives as we begin to develop proposals for us and we focus on regenerating the former gasholders, and we have large-scale brownfield sites with the also been working with local schools greatest potential for positive change. in Newham holding science enrichment days and design competitions. A vital first step is community | engagement and we work very hard | At Oval Village we have been building | | --- | --- | | to seek out a diverse range of local | links with the local community from | | people and properly understand their | the early stages, holding more than | | views. We then work with them to | 40community projects and events. | | design completely unique places, | InJanuary, with the help of one of | | which reflect local priorities and | ourcontractors, new LED lighting | | character and which are welcoming, | wasdonated to a local church to | | safe, low carbon and rich in nature | saveover 85% on their electricity bills. | andbiodiversity. ## COMMUNITY ## PLANS Once residents move in we create Community Plans that encourage lasting links between neighbours, engage residents in the long-term stewardship of their neighbourhood and help to create more friendly andintegrated places. Every plan isbespoke and underpinned by research into local priorities and interests. As our neighbourhoods mature we encourage residents toform decision making bodies which shape and influence their ## EARLY STAGE community for the long-term, gently transitioning ownership to them. ## COMMUNITY At The Green Quarter, we have held a number of popular community events including coronation celebrations, Christmas events and summer film ## INVESTMENT screenings. A new Steering Group has | We prioritise the early delivery of | hasalso opened up a previously | also been established to bring together | | --- | --- | --- | | public amenities and welcoming | inaccessible stretch of the Grand | local community leaders and groups to | | natural spaces, ensuring local people | UnionCanal and includes sculptures | help develop and implement community | | are among the first to benefit from | inspired by local school children and | activity. It will advise on community | | our investment and demonstrating | acanal boat café (pictured above). | projects and events and will manage | | our commitment to improving | | aCommunity Chest of £25,000 per | Councillor Shama Tatler, Cabinet people’s quality of life. year to be made available through Member for Regeneration and small grants to local community groups At Grand Union in the London Borough Planning at Brent Council, said: delivering positive outcomes within of Brent, the community celebrated “This is a fantastic moment for surrounding areas. thedelivery of a new Community Hub Alperton and the wider borough. in October. This purpose-built 5,000 TheCommunity Hub will be a huge square foot centre and café is overseen asset for the local area, creating by the Grand Union Community opportunities for people to socialise Development Trust and will provide and engage as a community. The activities, events and community Grand Union project has totally projects which benefit the local regenerated and revitalised this community. The Community Hub was neighbourhood.” akey ask of the local residents during the early community engagement undertaken on the site. This project 43Berkeley Group 2023 Annual Report ## CLIMATE ACTION ### Play an active role in tackling the global climate ### emergency by creating low carbon, resilient homes. What are we focusing on? Highlights from 2023 ### Embodied Carbon — Completed additional upfront embodied carbon assessments. — Launched new quantitative embodied carbon targets for projects and upskilled teams Meeting our science-based through workshops and events. target by reducing the — Engaged with supply chain partners such as Tata Steel and Buteline. carbon intensity of the — Completed detailed modelling of one development to understand the options available materials and services to meet our stringent internal 2030 targets. weuse by 40% by 2030 ### Low Carbon — Sourced 100% of electricity in the UK from renewable sources. — Decreased emissions by more than 55% in the year, predominantly due to the continued ### Operations transition away from the use of fossil fuels to biodiesel HVO (Hydrotreated Vegetable Oil). Meeting our science-based — Set divisional carbon budgets and an internal carbon price to drive reductions. target by reducing absolute — Held two energy awareness weeks to embed best practice within our project teams. emissions across our direct — Implemented project-level energy saving measures, such as ground-mounted solar operations by 50% by 2030 panels with supplementary battery storage at Silkstream. ### Low Carbon Homes — Continued to apply a fabric-first design approach, in combination with the most appropriate technology and infrastructure solution for each site. Meeting our science-based — The performance of our homes forms part of our pioneering Green Finance Framework; target by reducing the this year, 93% of completed homes had an Energy Performance Certificate (EPC) of B in-use carbon emissions or above. Within the year we set a requirement for all new homes (excluding intensity of our homes refurbishments) to meet a minimum EPC rating of B. by40% by 2030 — Whilst EPC ratings are based on predicted fuel costs, we also track the Environmental Impact Rating (EIR) as a more indicative measure of the carbon impact; 98% of completed homes had an EIR of B or above. — Focused on meeting the 2021 Building Regulations Approved Documents F, L, O and S that became effective in June 2022. — Continued preparing for the emerging Future Homes Standard. ### Resilience — Reviewed our climate action strategy following detailed Climate Scenario Analysis in 2022. Minor adjustments have been made to processes to ensure clear Group-level Managing climate risks oversight for risks such as subsidence at a project level. See page 66 for more detail. forour developments — Continued to incorporate adaptation measures on each project, with 100% of andbusiness developments incorporating sustainable drainage systems (SuDS). ### Net Zero Carbon — Steps taken to develop a Net Zero Transition Plan (see pages 46 to 47). — Supported the decarbonisation of UK housing through the purchase of 250 credits Maintaining carbon from the new RetrofitCredits project developed by HACT and Arctica Partners. This neutral business utilises funds to retrofit homes through the installation of energy efficient measures operations (scopes 1 and such as improved insulation. 2) and work to become — Procured certified high quality carbon offsets for residual scopes 1 and 2 (market- net zero across scopes 1, 2 based) emissions. and 3 by 2040 Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved | Assess embodied carbon for 10 sites | — Undertake embodied carbon | — Meet our science- | | --- | --- | --- | | and work with our supply chain to | assessments and achieve | based targets | | reduce impact. | reduction targets for each | by2030. | development. Complete Climate Scenario Analysis — Achieve a reduction in tounderstand how climate change — 25% reduction from 2019 in absolute energy use, couldimpact our business. scope 3 emissions intensity. in line with the 15% Maintain carbon neutral operations reduction set out by — Re-baseline our SBTs and (scopes 1 and 2). the Government’s develop new targets for carbon Energy Efficiency 20% reduction from 2019 in absolute emissions and energy reduction. Taskforce. scopes 1 and 2 emissions. — Develop a Net Zero Transition 10% reduction from 2019 in scope 3 — Be on the pathway to Plan and achieve a validated emissions intensity. be a net zero carbon net zero target. business by 2040. 44 Berkeley Group 2023 Annual Report on upskilling our teams through it’sgreat to see Berkeley ## BROADENING OUR workshops and events on how to demonstrating leadership on ## UNDERSTANDING reduce embodied carbon during embodied carbon data collection, ## OF EMBODIED design and specification. This has setting benchmarks from which they included detailed information for can reduce emissions and aiming ## CARBON project teams on how to meet the towards all completed projects having stringent 2030 targets through a lifecycle assessment from 2026. Strategic Report Corporate Governance Financial Statements | In 2022 we undertook detailed | modelling one mid-rise development, | Inthe absence of strong regulation, | | --- | --- | --- | | embodied carbon assessments on 15 | Lea Bridge. Some measures, such | it’s up to leading organisations like | | projects to understand the impact of | asmaterials avoidance, concrete slab | Berkeley to set high standards and | | the materials used to construct the | or balcony design were found to be | gobeyond regulatory requirements.” | | homes we build. This information | feasible in the short-term, whilst others | | | enabled us to set out our baseline | will require further development and | | | position. | testing of products before they can | | beimplemented at scale. In July 2022 we launched new quantitative targets which will lead The UKGBC said: ## 23 toa 40% reduction from this baseline “As a partner on our Advancing Net by 2030, with interim milestones set detailed embodied carbon Zero programme and supporter of until this date. We have also focused assessments undertaken to date UKGBC’s mission for over 15 years, ### Our science-based targets | Upfront embodied carbon | Low carbon construction sites | Low carbon homes | | --- | --- | --- | | 40% reduction in scope 3 purchased | 50% reduction in absolute scopes | 40% reduction in scope 3 use of sold | | goods and services per square metre | 1 and 2 GHG emissions by FY2030 | products per square metre of legally | | of legally completed floor area by | from a FY2019 base year. | completed floor area by FY2030 from | | FY2030 from a FY2019 base year. | | a FY2019 base year. | ## -13% -76% 4% Decrease since baseline year Achieved since baseline year Increase since baseline year ## ACHIEVEMENT ## OF OUR SCOPES 1 AND 2 ## SCIENCE-BASED TARGET Through the dedication and determination of our site teams tooperate more efficiently, we are delighted to have achieved our 2030 4,000 science-based target for scopes 1 and 2 (market-based) emissions, having seen a56% reduction compared to 2022 and a 76% reduction since our2019 base year. Scopes 1 and 2 (market-based) emissions – tCO2e This has predominantly been achieved through the transition away from the use of gas oil on our construction sites. Other (including biodiesel HVO) Within the year, biodiesel HVO as a Fugitive emissions Purchased heat lowcarbon alternative to diesel has Purchased electricity (overseas only) accounted for 95% of direct fuel use Natural gas and 10 sites have operated diesel free. Company vehicle business travel Gas oil 0 45Berkeley Group 2023 Annual Report 2019 2020 2021 2022 2023 ## OUR ROUTE TO NET ZERO ### We are currently developing a Net Zero Transition ### Plan in line with the recommendations published by ### the Transition Plan Taskforce (TPT). We are reviewing ### the guiding principles and 19 sub-elements in the ### creation of our plan, which will set out our journey ### towards being a net zero business. ### Action to date Next steps (to 2030) — Set near-term scope 3 SBT. — Comply with the forthcoming Future Homes Standard, — Improved building fabrics resulting in better air tightness. whichis expected to drive reductions beyond our — Used lower carbon technologies in our homes including solar science-based target. PV, heat pumps and CHP systems. — Increase the use of heat pumps and other renewable technologies. — Set minimum Energy Performance Certificate (EPC) rating — Phase out the use of gas boilers in new homes. ofB for new homes (excluding refurbishments). — Further focus on energy efficiency, particularly out of hours usage. — Set and achieved our near-term scopes 1 and 2 SBT. — Continue to ensure directly procured diesel is renewable (i.e. — All electricity use in the UK backed by REGOs since May 2017. biodiesel HVO). — Set energy efficiency standards for site set up and operation. — Work with our supply chain to move towards zero fossil fuel sites. — Significant transition away from diesel towards biodiesel HVO. — Set a strategy for decarbonising the company’s vehicle fleet. — Set near-term scope 3 SBT. — Extend our data coverage and move towards hybrid reporting — Completed 23 detailed embodied carbon studies. alongside our existing spend-based methodology. See page — Launched quantitative targets for projects. 76 for further details. — Upskilled teams on how to reduce embodied carbon during — Broaden the scope of our supply chain engagement to key design and specification. hot spots (high impact materials) and preferentially partner — Lifecycle assessments being completed on new developments. with companies decarbonising their operations. — Completed study on how a building could achieve the 2030 targets. — Undertake an assessment on every site and reduce carbon by: — Engaged with several supply chain partners and • Avoiding or reducing material use manufacturers in key areas such as concrete and steel. • Selecting low carbon materials (e.g. with recycled content) • Selecting low carbon suppliers (i.e. those changing their production methods) • Focusing on future innovation in products e/100 sq m) 2 Targeted trajectory Predicted impact based onBuilding Regulation changes and our internal targets for reducing Carbon intensity by legally completed floor area (tCO embodied carbon ## 2019 2020 2021 2022 2023 2026 Engagement with industry Governance We are proud to be a founding partner of the UKGBC’s Ultimate responsibility for climate action lies with named Advancing Net Zero programme, which is helping to lead and Executive Sponsors and there are monthly Our Vision co-ordinate Climate Action across the UK’s built environment 2030 and Sustainability Board meetings to discuss sector, and to be a sector lead playing an active part of the Net progress. A sustainability team ensures the strategy is Zero Carbon Building Standard Homes Group. Within the year implemented. We have a lead for Climate Action in each we also became active participants of the Future Homes Hub, operating company. Climate Action is also a key action helping us to work with industry to understand and shape the area for other Group Committees, such as the Technical future for new homes. Committee. See page 64 for more details. 46 Berkeley Group 2023 Annual Report ## 2030 2040 Key to area of focus Low carbon homes Embodied carbon This is carbon from the use This is carbon relating to the ofenergy by our customers. activities of our supply chain. Itarises from the energy usedwithin extraction, Low carbon operations processing, manufacturing and This is carbon that is related to transportation of construction our own activities from energy materials together with the Strategic Report Corporate Governance Financial Statements used on construction sites, activities of companies who sales suites and in our offices. provide a service to us. ### Future steps and considerations Challenges, uncertainties and interdependencies — Move towards using an Energy Use Intensity (EUI) target as — The move towards all electric homes may inadvertently the key metric for low carbon homes, in line with changes increase costs for customers as electricity is more expensive inindustry best practice. than gas. — Focus on as-built performance, rather than as-designed — There may be a lack of capacity in the electricity grid to performance, acknowledging that there is expected to be connect our homes. agap between the two measures across the whole industry. — The specifics of the Future Homes Standard have not — Understand and improve energy demand management in homes. beenpublished. — The performance and maintenance of emerging technologies — Invest in renewable energy production such as solar panels is not tested. onour large sites to power construction activity. — Engage with customers on how to operate non-traditional — Increase the use of electric machinery on our sites. heating solutions, such as air source heat pumps. — Move away from spend-based reporting of embodied carbon, — Biodiesel HVO must be carefully procured from certified using detailed project-level data through embodied carbon sources in order to restrict potential negative consequences assessments and Environmental Product Declarations (EPDs) inother countries, such as deforestation. from suppliers. — The fuel market is changing and there is now an uplift in cost — Encourage and support suppliers and contractors to set for biodiesel HVO. targets and work in partnership to ensure these are met. — There is limited availability of electric machinery. — The vast majority of our suppliers and contractors do not haveSBTs. We need to work with them andencourage action to drive down emissions. — We need to support a just transition and work closely with ourUK-based partners as they themselves make changes for a lower carbon world, rather than moving our procurement tocountries with a cleaner electricity grid. — Data availability and accuracy can be an issue within the supply chain as companies themselves make progress on the topic. ## 2030 NEAR-TERM SBTS ## 40% reduction ## NET ZERO TARGET ## >90% reduction Predicted impact based on Building Regulation changes e/100 sq m) 2 and our internal targets for Residual emissions to be reducing embodied carbon offset ## 2030 2040 Targeted trajectory Alignment with business model and financial planning Offsetting In developing our in-depth transition plan we will show Emissions reductions are our priority, with this action how we will embed our ambitions for climate action within currently supplemented by the procurement of certified our business model. The plan will highlight how this may high quality carbon offsets for the remainder of our scopes affect the homes and developments we build, together with 1 and 2 (market-based) emissions to be a carbon neutral resourcing, operational and capital expenditure, as well as business. As we transition towards being a net material interdependencies on the environment, workforce zerobusiness, we will adopt the definition of net zero set and value chain. by the Science-Based Targets initiative (SBTi), namely to neutralise residual emissions across scopes 1, 2 and 3. Carbon intensity by legally completed floor area (tCO 47Berkeley Group 2023 Annual Report ## 2019 2020 2021 2022 2023 2026 ## NATURE ### Create a biodiversity net gain and make a measurable ### contribution to the natural environment on every development. What are we focusing on? Highlights from 2023 ### Biodiversity — Industry leading commitment in 2017 to achieve a measurable biodiversity net gain (BNG) on every site, far ahead of mandatory requirements coming into force in ### Net Gain November 2023. Delivering a minimum — Since this time, all new planning applications have committed to BNG across 54 10% gain for every developments. In addition to a significant area at one site in Milton Keynes, they are new development setto create or enhance an area of more than 550 acres. This will include 55 acres ofliving roofs, 235 acres of woodland and 150 acres of nature-rich grassland. — Commitment evolved in May 2021 to 10% BNG on every site; this year this has been achieved on 100% of sites that have gone into planning. — Two developments implemented their BNG and landscape design this year; Courtyard Gardens, Oxted and Filmworks, Ealing. Whilst both are relatively small sites, they were each able to achieve gains of more than 20% through the incorporation of habitats suchas living roofs and tree planting. — Continued to work closely with external specialist ecologists who complete a habitatsurvey on each and every site, followed by engagement with landscape designexperts to ensure that preservation and enhancement of biodiversity is centralto our landscape design. — Co-hosted the Biodiversity Conference with Natural England and the Local GovernmentAssociation. — Partnered with key organisations such as the Wildlife Trusts. We were delighted tobeable to showcase biodiversity at Kidbrooke Village to 60 leaders representing theUK’s local Wildlife Trusts in November 2022. — Founding member of the Blue Recovery Leaders Group, set up in 2021 by the Wildfowl and Wetlands Trust. ### Environmental — Commitment to achieve environmental net gain on all sites by 2030, leaving the natural environment in a measurably better state than it was before. ### Net Gain — Focusing on four areas – water, climate, pollution and ecology – as we refine our Considering water, approach before we trial it on one of our developments. climate, pollution — Worked in partnership with Thames Water on a water neutrality trial at Royal Exchange. andecology — Active engagement with industry on the topic, including through the UKGBC’s Embodied Ecological Impact working group, chairing the Future Homes Hub’s working group on Water Efficiency and chairing the Green Construction Board’s Biodiversity and Environmental Net Gain working group. — Began preparing for the Taskforce on Nature-related Financial Disclosures (TNFD). | 54 | >550 | | --- | --- | | sites designed to deliver | acres of created or enhanced | | abiodiversitynet gain to date | habitat,in addition to a significant | area at Milton Keynes Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved 10% BNG on every new development. — Develop an overall approach for — Achieve an overall environmental net gain and trial environmental Upskill managing agents and landscaping it on at least one site by2025. net gain on all companies on maintaining BNG. developments. — Assess the impact of nature within Partner with a water company to our supply chain in line with the undertake a water neutrality trial. Taskforce on Nature-related Financial Disclosures (TNFD). 48 Berkeley Group 2023 Annual Report Two of our developments won Green Apple Awards for their approach to nature. AtTrent Park this was given for the improvements made for habitat and biodiversity such as implementing bird boxes, hedgehog highways, bat roosts, SuDS and tree planting, whilst Strategic Report Corporate Governance Financial Statements The Green Quarter won the award for Environmental Best Practice. This site is committed to achieving BNG of over 93%, with 50% of the development comprising green open space including 13 acres of parkland, 2,500 new trees and 17 acres of podium gardens. Nature events have been held for community planting and local children. We have developed a biodiversity garden guide at Hartland Village to give new residents information on howthey can utilise their garden space to encourage biodiversity, from wildflower areas to drought gardens, with tips on species and maintenance. ## NATURE ## RECOVERY ## IN ACTION A new country park has been opened at Sunningdale Park re-connecting the previously inaccessible 47 acres of Grade II Listed historic parkland to the community for the first time in centuries. ## ACHIEVING ## WATER ## NEUTRALITY ## AT A PROJECT ## SCALE This year we worked in partnership with Thames Water to pilot the ## concept of water neutrality in THE whatisunderstood to be the firstproject at this scale. ## BIODIVERSITY Smart water meters were installed ineach of the 320 homes at Royal Exchange in Kingston upon Thames. ## CONFERENCE More than 45,000 litres of water per day has been offset through Thames As the first homebuilder to commit Scan code to watch Water retrofitting 79 local schools to BNG across all sites, we were highlights from the and businesses, through fitting new delighted to co-host a Biodiversity conference | water saving devices and measures | Conference with Natural England | | --- | --- | | such as fixing leaking toilets, dripping | andthe Local Government | | taps and urinals. | Association in March 2023. | | The results of the trial will be | More than 500 delegates attended | | disseminated throughout the water | this major event which aimed to | | utility and developer sectors, as proof | prepare development and local | | that offsetting water demand from | authority professionals for the | | new homes can be achieved with | forthcoming mandatory BNG | | relatively simple measures in existing | requirements and to generate | | homes, schools and businesses. | debatearound the challenges | andopportunities ahead. 49Berkeley Group 2023 Annual Report ## EMPLOYEE ## EXPERIENCE ### Create a positive working environment for our people; ### one that fosters respect, support, wellbeing, safety and ### inclusivity. What are we focusing on? Highlights from 2023 ### Health and Safety — Annual Injury Incidence Rate (AIIR) per 100,000 people of 79. — Work at Height campaign in progress to complement our existing Good Order, GoodWork Continuing to and Good Health programmes. targetzeroharm — Established, robust health and safety management system. — Strong leadership approach, with more than 2,400 directors’ safety visits completed in the year and nearly 400 site assessments completed by an independent Group health and safety team. — Berkeley Capital won the Construction Housebuilding and Property Development Industry Sector award from RoSPA in 2023. ### Equity, Diversity — Developed our Group approach to Equity, Diversity and Inclusion (EDI). — New People Framework sets out steps taken at Group and required at a divisional level ### andInclusion (EDI) to support EDI, together with other areas such as attraction and recruitment, staff Ensuring our workforce upskilling and employee wellbeing. isrepresentative of the — Expanded partnerships to support our progress, including the Race at Work Charter areas in which we operate and Disability Confident employer scheme. — Autonomous businesses have a variety of programmes and initiatives, such as networks for women and those to celebrate race, ethnicity and cultural heritage. — Developing a network of Fairness, Inclusion and Respect (FIR) Ambassadors, in line with the industry-wide programme. — Established a calendar of events to align with external awareness and celebration days, such as International Women’s Day and Pride. ### Championing — All employees offered private medical insurance, together with a range of wellbeing benefits, including an Employee Assistance Programme and virtual GP service. ### Wellbeing — Group-wide e-learning on mental health awareness, supported by a network of more Demonstrably improving than 240 trained mental health first aiders. the health and wellbeing — Continued support to contractors through site-specific initiatives such as Calm Zones of our employees and awareness raising of the Construction Helpline. ### Employee — Each autonomous business plans employee engagement as part of its divisional people strategy. Read more on page 80. ### Engagement — Staff surveys have highlighted our strengths including clarity around goal setting and Engaging our workforce, to collective working and also give valuable insight over how we can improve. shape the way we operate | 31% | 79 | | --- | --- | | of managers are female, together | Annual Injury Incidence Rate (AIIR) | | with 37% of our total employees | per100,000 people compared to the | construction sector average of 326 (HSE, October 2022) Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved Providing diversity and inclusion training — Continued improvement — Have an engaged and and unconscious bias training to all staff. in staff engagement. diverse workforce that is representative of the areas Continued focus on excellent health and — One third of management in which we operate. safety standards and targeting zero harm. positions held by women. — Have a positive health — Demonstrate improvement impact on our employees in employee health and and contractors working wellbeing. onour sites. 50 Berkeley Group 2023 Annual Report ## MODERNISED ## PRODUCTION Strategic Report Corporate Governance Financial Statements ### Harness advanced manufacturing and digital technology ### to build more homes and to achieve higher standards of ### quality, safety and sustainability. What are we focusing on? Highlights from 2023 ### Advanced — Several years of research, development, prototyping and testing has been undertaken at our manufacturing facility, Berkeley Modular. The approach is precision manufactured, ### Manufacturing highly automated, digitally integrated and safe, combining machine, robotic and skilled Commencing production manual processes within a controlled factory environment. at the Berkeley Modular — First modules from Berkeley Modular delivered and installed at Kidbrooke Village, to be advanced manufacturing followed by a further period of research and development to improve process and product. facility — Role of the supply chain is key in helping us to innovate and we have welcomed input from our partners. Travis Perkins Plc has been critical in developing logistical solutions, and other suppliers have produced bespoke systems and sub-assemblies to meet the needs of the advanced manufacturing process. ### Modern Methods — More than 95% of our projects incorporate pre-manufactured assemblies and components. This can help to achieve shorter production times, lower costs, higher quality, sustainability ### ofConstruction and safety, and increased reliability. Designing homes — Review undertaken of projects in detailed design this year against the Government’s tomaximise the use Modern Methods of Construction (MMC) Definition Framework. ofmodern methods — The most frequently utilised types of MMC are pre-manufactured staircases, panelised ofconstruction assemblies such as cladding, balconies, pre-cast columns, bathroom pods and joists. We are also increasingly utilising technology such as drones to survey hard to access areas, and robotics were used on one site to help install windows. — Preparing to utilise this information to measure the Pre-Manufactured Value (PMV) of our developments as an indicator of designing for manufacture and assembly, which can help to achieve shorter delivery times, lower costs, higher quality, sustainability andsafety, and increased reliability. ### Increasing the Use of — More than 75 project phases have begun to use a new, bespoke system for capturing digital information about each home from pre-construction to post-completion, known ### Digital Technology as the ‘golden thread’ of information. Assessing the benefits of — An increasing number of our developments benefit from digital design and collaboration, digitally enabled processes utilising Building Information Modelling (BIM) to bring complex designs to reality. for each home built | First | >75 | | --- | --- | | modules produced by the Berkeley | project phases now using our bespoke | | Modular facility installed on site | digital information system | Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved Begin production at Berkeley Modular. — Measure and increase — Design all new homes theproportion of Pre tomaximise the use Introduce a new digital platform to Manufactured Value (PMV) ofmodern methods capture the ‘golden thread’ of information within our developments. ofconstruction. for every home. — Establish a modernised Design all homes to maximise the use of approach to production, modular construction. including advanced Apartment blocks over 11m to utilise the manufacturing and digital UK BIM Framework ISO 19650 standard. technologies which deliver high standards and additional capacity. 51Berkeley Group 2023 Annual Report ## 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. What are we focusing on? Highlights from 2023 ### Emerging Talent — Gold member of The 5% Club, reinforcing our commitment to maintain at least 5% ofour workforce as a graduate, apprentice or sponsored student. Ensuring 5% of people — 10% of our employees are in ‘earn and learn’ positions, including on average 160 working onour sites apprentices and 70 graduates. andin ouroffices are — Continued to offer a range of academy programmes to bring experienced people anapprentice, graduate intothe business from different industries. orinformal training ### Industry Image — Published a new booklet highlighting the available routes into Berkeley and the industry, with the interactive version receiving more than 500 visits in three months. Actively champion — 12 sites took part in Open Doors, an industry-wide initiative run by Build UK and CITB. careers in the built — Ran or attended more than 200 events with a careers focus, from construction site environment visits to running projects at local schools and attending careers fairs. — Hosted 75 work experience placements, including three T Level students as part of anew type of technical two-year course with 20% of time spent in the workplace. Wehave been working with training providers to influence the roll out of T Levels and plan to host further placements, initially focusing on design, surveying and planning. — Beginning to grow our network of STEM (Science, Technology, Engineering and Maths) Construction and Built Environment Ambassadors to champion school engagement. ### Employee Skills — Launched a new Competency Framework to support our employees in understanding and working towards core, role and leadership and management skills, whilst also Upskilling our workforce, responding to the requirements of the Building Safety Act and themes such as to support a modernising digitisation and net zero. industry — Continued to operate as a CITB approved and CITB Site Safety Plus training organisation, delivering construction training courses to an industry agreed standard. — More than 4,300 hours of training delivered by the Berkeley Academy, supported bytraining, management and leadership programmes run locally by our autonomous businesses. — Around 20% of current apprentices are existing employees who have chosen toupskillusing an apprenticeship. | 10% | >200 | | --- | --- | | employees are in | outreach events focused on | | ‘earn and learn’ roles | inspiringpeople to work in the | builtenvironment sector, together with75 work experience placements Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved Implement a Group-wide — Ensure the Competency — Develop a skilled and CompetencyFramework. Framework is being competent workforce able effectively implemented. to support our changing Maintain membership of The 5% Club. production needs. — Offer placements to Work with our supply chain to support T Levels. — Engage with more than encourageapprentices, graduates 50,000 young people to andsponsored students. — Develop a network of champion careers in the STEMambassadors. Actively engage with young people built environment sector. andinspire them to join the industry. — Gift up to 25% of our Apprenticeship Levy. 52 Berkeley Group 2023 Annual Report ## SUPPLY CHAIN Strategic Report Corporate Governance Financial Statements ### Build a responsible and constructive supply chain; ### one that is productive, practical and profitable, ### sustainable, ethical and dependable. What are we focusing on? Highlights from 2023 ### Best Practice — Updated our standard operating procedures in line with the recommendations identified by the Chartered Institute of Procurement and Supply (CIPS), pushing Benchmarking against ustowards our goal to achieve the Procurement Excellence Award by2025. global best practices, and — Worked closely within industry, including through the Construction Leadership Council working collaboratively (CLC) Product Availability Group and the CIPS Senior Construction Leadership Group. with industry — Partner member of the Supply Chain Sustainability School (SCSS). — Worked with Travis Perkins plc and Kingspan Insulation to develop product provenance and traceability knowledge and capability to ensure we are at the forefront of capturing and maintaining the ‘golden thread’ of information. ### Collaboration — Worked closely with key trade contractors to understand their challenges and work more effectively together. Alongside daily communication at a project level, our Implementing 360-degree director-level trade sponsors have held meetings with over 100 of our key contractors. feedback across our — Used 360-degree surveys to gain valuable feedback from our supply chain across a supply chain range of topics (see page 82). — Held supply chain conferences within our autonomous businesses. ### Overall Value — Continued to assess contractors during the tender process against key topics, supplemented by a detailed tender scoring matrix which includes a numerical assessment on sustainability, Enhancing our tender modern methods of construction, future skills, collaboration, material procurement and recommendations sign off modern slavery. This ensures our contractsareawarded on overall value rather than process, so we procure on costalone. overall value over cost — Prompted further discussion and action on tackling modern slavery, including enhanced due diligence within the tender process, new guidelines for manufacturer and factory checks and raising awareness through the site induction process and training. ### Materials — Progressed with our Common Materials Strategy covering 10 key material groups tosupport requirements regarding technical compliance, quality, sustainability and Launching a new embodied carbon, modern slavery, health and safety and competence. In some cases materials strategy thiswork has led to manufacturers enhancing their working practices. — Worked with the Office for Product Safety and Standards regarding changes in practices which could lead to better outcomes in terms of buildings and product safetyand the Construction Productions Association (CPA) regarding the adoption ofthe Code for Construction Product Information (CCPI). | 55 | 30 | | | --- | --- | --- | | key contractors provided feedback | days average payment time | | | inour 360-degree feedback process | for contractors, in line with | | | | thePromptPayment Code | Signatory | Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved | 100% of projects to award contracts | — Achieve the CIPS | — Benchmark procurement | | --- | --- | --- | | onbest overall value. | Procurement | and supply chain activity | | | ExcellenceAward. | against global best | Assess all contractors for modern practice and provide slaveryrisks. — Ensure the ‘golden thread’ resilience and expertise of information through Implement and embed a new tomeet strategic goals. management of product materialsstrategy. provenance and traceability. — Develop new supply Align procurement activity with Build chaincapability aligned — Expand our approach Quality Assurance, Modernised tomodern production tocombatting modern Production and Climate Action targets. methods and digital slaveryand measure technologies. Implement 360-degree feedback across theeffectiveness of key members of our supply chain. ouractions. 53Berkeley Group 2023 Annual Report ## 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. What are we focusing on? Highlights from 2023 ### Sustainable Returns — Berkeley has a unique long-term operating model that is responsive to the cyclical nature of the housing market and focuses on large-scale developments where our Delivering returns to expertise and financial strength can unlock long-term value for our stakeholders. ourshareholders whilst — This disciplined approach allows us to deliver sustainable, risk-adjusted returns over creating value for other thehousing market cycle, targeting a sustained pre-tax return on equity of 15%. stakeholders — Read more about our financial key performance indicators on pages 14 and 15. ### Value to Society — Undertook the annual assessment of our economic contribution, shown opposite. — Awarded a Management Today Business Leadership award for long-term business Undertaking a broader success in 2023 for the impact of Our Vision 2030. assessment of our value — We have been assessing social value at a project level since 2021. to society across a range — We plan to refresh the assessment of the value that our activities have on society first of indicators undertaken in 2020. This includes the benefits of early careers training, investment in site health and safety, and innovative practices, together with the impacts that we have, such as GHG emissions. ### The Berkeley — Continued to provide core funding to the Berkeley Foundation, our charitable foundation which was established in 2011. It works in partnership with expert frontline charities ### Foundation across London, Birmingham and the South of England, supporting young people and Engaging all employees their communities to thrive. inthe work of the — Maintained a network of Foundation Champions to actively encourage support of the Berkeley Foundation Foundation’s activities through volunteering, fundraising or donations. — Launched a new Volunteering Hub, encouraging more staff to volunteer their time. — 59% of our people chose to actively contribute to the Foundation’s work over the past 12 months, including organising 26 major fundraising events and donating through payroll giving, raising £991,000, and volunteering over 1,300 hours. Across the Group, we have offered work placements and job opportunities, held careers days to help young people about to start their journey into employment, and shared our expertise. ### Judges commended Berkeley’s clear focus ### on ESG and staff issues, and the measurement ### of customer satisfaction and NPS. ### Judges noted consistent long-term growth, ### not just infinancial terms, but culture, values ### and product. Short-term targets Achieved Medium-term targets Long-term targets Partially achieved (by 2023) (2024 to 2029) (by 2030) Not achieved | Quantify and report on our value | — Achieve a 15% pre-tax | — We will be a successful | | --- | --- | --- | | tosociety. | return on equity across | business delivering | | | the cycle. | sustainable returns whilst | All employees to be engaged with creating demonstrable thework of the Berkeley Foundation — Increase employee value for our other eachyear. engagement with the stakeholders. Foundation year-on-year. Work with the Berkeley Foundation — Demonstrate the impacts toagree targets for achieving our — Leverage skills and expertise ofour work with the sharedgoals. across the Group to Berkeley Foundation. support the Foundation’s charity partners. 54 Berkeley Group 2023 Annual Report ## ECONOMIC ## CONTRIBUTION Strategic Report Corporate Governance Financial Statements 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. White City Living ### “On average, every new home built by Berkeley in ### the last five years has generated £295,000 of value ### to the state through taxation and contributions.” Jobs Homes Communities | 27,000 | 19,640 | £2.1bn | | --- | --- | --- | | Berkeley has supported, on average, | Berkeley built 4,637 homes in 2022/23 | Including £0.6 billion in 2022/23. | | 27,000 UK jobs per annum directly | and a total of 19,640 over the last five | During the last five years, Berkeley has | | and indirectly through its supply | years (including joint ventures). | contributed £1.4 billion in affordable | | chainover the last five years. | | housing subsidies* and committed to | additional payments of £0.7 billion to help pay for a wide range of facilities and services for local communities. Economy Tax | £13.8bn | £3.7bn | | --- | --- | | Berkeley’s contribution to UK GDP | Total UK tax contribution of £0.8 billion | | was £2.6 billion in 2022/23 and | in 2022/23 and £3.7 billion during the | | £13.8 billion for the last five years. | 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. * Berkeley calculation, based on MHCLG valuation methodology 55Berkeley Group 2023 Annual Report ## THE BERKELEY ## FOUNDATION: ## A FORCE FOR ## CHANGE The partnership with St Basils will ### The Berkeley Foundation supports Berkeley’s support the development of a Youth ### socialpurpose, working in partnership with the Voice programme, empowering young ### voluntarysector across London, Birmingham people to use their lived experience ### andtheSouth of England. toinfluence wider policy and change. Anew three-year partnership with Putting people and partnerships first (GAYE). Our teams also supported the Groundwork London is also underway, The Foundation is the independent Foundation’s charitable programmes supporting disadvantaged young charitable foundation set up by through offering work placements peopleto kick-start their careers in Berkeley. It works with innovative andjob opportunities, careers days thegreen economy through a youth charity partners to ensure that young and by sharing their expertise with leadership programme. people and their communities have the charity partners. The Foundation was also pleased to tools and resources they need to thrive Highlights from the year include renew its long-term partnership with and be a force for change in the world. launching thesecond year of a homelessness charity Crisis, supporting This is achieved primarily by funding £900,000 Resilience Fund, which a place-based approach to ending high quality, frontline support for aims to help small to medium-sized homelessness in theLondon Borough marginalised young people in the charities and Community Interest of Brent. communities around our sites. Berkeley Companies (CICs) to develop their The Foundation has also maintained provides core funding, alongside a organisational resilience. This year, the its existing funding commitments network of dedicated Foundation Foundation committed up to £30,000 andactivities and was pleased to Champions across the business whodrive in funding over two years to 10 new offeradditional support to its charity staff engagement and buildrelationships organisations, alongside a programme partners during the cost of living with local charitypartners. of learning and development support. crisis. This has included pro bono The Foundation is deeply embedded The Foundation also launched new support from staff and a number in Berkeley’s culture, with more than three-year partnerships with New ofunrestricted grants. half of our workforce choosing to get Horizon Youth Centre and St Basils, involved with the Foundation’s work both supporting young people over the year through volunteering, experiencing homelessness. fundraising or Give As You Earn | >6,000 | £3.9m | £991k | | --- | --- | --- | | people reached through the | given to the Berkeley Foundation’s | raised by Berkeley employees | | Foundation’s charity partnerships, | charity partners through grants, | fortheBerkeley Foundation | | helping them to move out of | stafffundraising and GAYE | anditscharity partners through | | homelessness, build their skills, move | | fundraising and GAYE | into work or access new opportunities Scan the code to find outmore about | 59% | 30% | theBerkeley Foundation | | --- | --- | --- | | Berkeley employees got involved | Berkeley staff are signed | | | withBerkeley Foundation activities | uptoourGAYE scheme | | in the year, including volunteering over1,300 hours of time for the Foundation’s charity partners 56 Berkeley Group 2023 Annual Report ## THE FOUNDATION’S ## 2030 STRATEGY Strategic Report Corporate Governance Financial Statements This year has seen the Foundation embed its ambitious 2030 strategy, which sets out a clear vision and five interconnected impact goals. 1. A safe place We want to ensure that everybody in our communities ## OUR VISION to call home hassomewhere safe, secure and sustainable to call home The Berkeley Foundation’s vision is 2. Journey to We want to ensure that all young people are prepared for that young people and employment workandhave the opportunity to build a sustainable career their communities will have the tools and resources they need to 3. Health and We want to ensure that young people and their communities thrive and be a force wellbeing havethesupport they need to live happier, healthier lives for change in the world. Our five impact 4 . You th We want to ensure that young people are empowered to positively goals are: leadership impact their own lives and the communities in which they live 5. A resilient We want to ensure that young people and their communities voluntary sector aresupported by a voluntary sector that is effective, inclusive andwell resourced Strategic Partnerships Resilience Fund ## WORKING IN A small number of long-term, Organisational development support transformational partnerships. for small to medium-sized charities. ## PARTNERSHIP Community Partnerships Development Fund The Foundation builds long-term, Local charities chosen by staff in A flexible funding pot that allows impactful partnerships with the eachBerkeley operating business. theFoundation to explore new voluntary sector through four ideasand respond to opportunities. mainroutes: ## PROMOTING ## PROVIDING LONG-TERM ## YOUTH LEADERSHIP ## SUPPORT FOR DEMELZA WITH GROUNDWORK ## LONDON | | “Berkeley colleagues have always been | Over the next three years we will be | | --- | --- | --- | | | keen to help out with practical things, | working with Groundwork London, | | | like helping to keep the gardens tidy | acommunity charity that is passionate | | | atour Kent hospice, sorting goods | about creating a future where every | | Demelza cares for children who are | forour 29 charity shops, wrapping | neighbourhood is vibrant and green, | | facing serious or life-limiting conditions, | Christmas gifts and even collecting | every community is strong and able | | throughout Kent, South East London | Christmas trees for ‘tree-cycling’! | toshape its own destiny and no-one | | and East Sussex. The charity has | TheBerkeley relationship keeps going | isheld back by their background | | beenBerkeley East Thames’ Community | from strength to strength and we look | orcircumstances.The Strategic | | Partner since 2012, receiving over | forward to developing our relationship | Partnership will see us working together | | £800,000 in the lastdecade from staff | further in the year ahead.” | to deliver a bespoke youth leadership | | fundraising, donations through payroll | | programme, focused on supporting | Petra Bones, Head of Corporate giving and grants from the Berkeley young people aged 16 – 19, to become Partnerships at Demelza | Foundation. This year, staff raised over | future leaders and preparing them | | --- | --- | | £59,000 forDemelza through payroll | toaccess employment in the green | | giving donations and events, including | economy. The programme willsupport | | a5-a-side football tournament, and | young people from disadvantaged | | over£40,000 in match funding from | backgrounds, who donot traditionally | | theBerkeley Foundation. They also | have access to green spaces. | volunteered 192 hours of time and expertise, and organised for two garden pods to be installed in Demelza’s garden, giving the staff, volunteers and families aplace to relax among nature. 57Berkeley Group 2023 Annual Report ## ESG PERFORMANCE ### We monitor a range of Environmental, Social and Scan the code to see further ESG metrics ### Governance (ESG) indicators across our business and supporting notes ### activities, and many of these align to the core KPIs ### ofourbusiness strategy, Our Vision 2030. Key to strategy Customers Quality Communities Climate Action Nature Employee Modernised Future Skills Supply Chain Shared Value Experience Production Link to | Indicator | strategy Measure Unit 2023 2022 2021 | | | --- | --- | --- | | New homes | | Completed homes, including joint ventures # 4,637 4,632 3,254 | | Benchmarks | | CDP Climate Change questionnaire rating Rating A- A- A | and indices FTSE4Good Index Series listed company Y/N Y Y Y MSCI ESG rating Rating AAA AAA AAA ## ENVIRONMENTAL Link to Indicator strategy Measure Unit 2023 2022 2021 Environmentally Number of environmental prosecutions # 0 0 0 responsible Monetary cost of environmental fines and penalties £ 0 0 0 operations Scopes 1 and 2 (location-based) emissions tCO 2 e 5,223 7,832 8,738 Scopes 1 and 2 (market-based) emissions tCO 2 e 963 2,211 2,549 3 Water consumption m 201,979 236,234 240,232 Total waste generated (including construction, tonnes 596,921 734,320 382,824 demolition and excavation wastes) Total waste reused or recycled % 97 90 95 Total waste classified as hazardous tonnes 4,799 5,669 2,602 Construction waste generated tonnes 106,466 126,765 154,409 Construction waste reused or recycled % 95 95 96 Construction waste classified as hazardous tonnes 225 606 397 Sustainable Completed homes with an EPC rating of at least a B % 93 89 96 homes Average EPC score # 84 83 84 Completed homes with an EIR rating of at least a B % 98 - - Average internal water efficiency of completed homes lpppd 102.6 104.2 104.5 Completed homes constructed on brownfield land % 86 86 87 Completed homes with internal recycling facilities % 100 100 96 | Sustainable | Developments newly committed to deliver | # 8 6 7 | | --- | --- | --- | | places | biodiversity net gain | | | | Developments newly committed to deliver | % 100 100 100 | biodiversity net gain on site Developments newly committed to deliver % 100 100 100 biodiversity net gain greater than 10% Live development sites regenerating brownfield land % 76 80 77 Live development sites with SuDS % 100 92 91 Live development sites with cycle storage being % 100 100 100 provided Live development sites with electric car charging % 98 93 84 infrastructure being provided 58 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements ## SOCIAL Link to Indicator strategy Measure Unit 2023 2022 2021 Charitable Employees involved with GAYE % 30 29 32 giving and Employees involved with the Berkeley Foundation % 59 55 53 theBerkeley Foundation | Considerate | Average Considerate Constructors Scheme | #/50 44.14 43.40 43.37 | | --- | --- | --- | | construction | (CCS)score | | | Customer | Six month rolling average NPS (to March 2023) # 79.2 77.2 77.9 | | experience Customers who would recommend us to a friend % 97.5 98.0 98.3 (to March 2023) Health and AIIR per 100,000 people – direct employees and # 79 72 124 safety on site contractors AIIR per 100,000 people – direct employees only # 0 33 70 AIIR per 100,000 people – on site contractors only # 106 85 140 Work-related fatalities – direct employees and on # 0 0 0 site contractors Accident Frequency Rate (AFR) per 100,000 # 0.04 0.03 0.06 hours – direct employees and on site contractors Hours of training delivered on health and # 24,326 24,165 24,843 safetymatters Skills and Average monthly percentage of direct workforce % 10.0 8.9 7.2 training who are graduates, direct apprentices or sponsored students undertaking formal training Graduates joining the business via Berkeley’s # 42 38 26 Graduate Scheme programme Average monthly number of directly employed # 162 121 89 apprentices | Society and | Contribution to UK GDP, including through direct | £bn 2.6 3.2 2.5 | | --- | --- | --- | | community | activities by Berkeley, indirectly through supply chain | | | contributions | spend and the induced effect of household spend | | | | Contribution to UK tax, including taxes paid directly | £m 837 774 595 | by Berkeley and the taxes paid by customers and suppliers as a result of Berkeley activities Contribution to facilities and services for local £m 560 556 204 communities, including affordable housing subsidies UK jobs supported directly and indirectly through #,000 29 29 25 the supply chain Supply chain Average number of days taken to pay suppliers # 30 30 29 Average monthly number of on site contractors # 9,473 9,415 8,859 Quality Homes with fewer than five defects reported by % 91 94 95 customers on completion ## GOVERNANCE Link to Indicator strategy Measure Unit 2023 2022 2021 Board of Executive Directors # 5 5 6 Directors Independent Non-executive Directors # 10 11 11 Board of Directors – Male % 67 69 71 Board of Directors – Female % 33 31 29 Average tenure of Board of Directors yrs 7 6 7 Employees Total employees # 2,802 3,030 2,705 (as of 30 April) Total employees – Male % 63 63 64 Total employees – Female % 37 37 36 Non-Board senior management – Male % 29 40 40 Non-Board senior management – Female % 71 60 60 Reporting to Board or senior management – Male % 69 71 68 Reporting to Board or senior management – Female % 31 29 32 59Berkeley Group 2023 Annual Report # SASB DISCLOSURE The below disclosure of sustainability topics and accounting methods is in line with the Home Builders Sustainability Accounting Standard issued by the Sustainability Accounting Standards Board (SASB). SASB has established and maintains industry-specific standards to assist in disclosing financially material, decision-useful sustainability information to investors. Berkeley has chosen to disclose sustainability topics and accounting metrics in line with the Home Builders Sustainability Accounting Standard issued by SASB. The information provides an overview of the environmental and social impacts arising from our activities, as well as the ability of the Group to create value over the long-term. ![img-1.jpeg](img-1.jpeg) | Activity metric* | Code | Data | Detail | | --- | --- | --- | --- | | Number of controlled lots | IF-HB-000.A | 58,045 | Lots on owned or unconditionally contracted sites as of the last day of the reporting period. | | Number of homes delivered | IF-HB-000.B | 4,637 | The number of homes that completed within the reporting period. | | Number of active selling communities | IF-HB-000.C | 51 | Includes sites that have an implementable planning consent and that are in production. | ## LAND USE & ECOLOGICAL IMPACTS | Activity metric* | Code | Data | Detail | | --- | --- | --- | --- | | Number of (1) lots and (2) homes delivered on redevelopment sites | IF-HB-160a.1. | (1) 49,626 (85%) (2) 3,987 (86%) | Redevelopment sites are those that have been previously developed, including the replacement or refurbishment of existing structures, i.e. those sites considered to be brownfield land. | | Number of (1) lots and (2) homes delivered in regions with High or Extremely High Baseline Water Stress | IF-HB-160a.2. | (1) 49,549 (85%) (2) 4,149 (89%) | 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 (WRI) 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 drainage systems (SuDS). | | Total amount of monetary losses as a result of legal proceedings associated with environmental regulations | IF-HB-160a.3. | Enl | The Group had no environmental prosecutions in the reporting period and subsequently no monetary losses. | | Discussion of process to integrate environmental considerations into site selection, site design, and site development and construction | IF-HB-160a.4. | N/a | Our Vision 2030 is supported by our Sustainability Strategy which includes Sustainability Standards and procedures detailing the minimum Berkeley requirements for our day-to-day operations and our new developments. These ensure that we have processes in place to integrate environmental considerations throughout the development process. For example: - Site selection: Berkeley focuses on urban brownfield regeneration, which is inherently sustainable. Prior to land purchase, Berkeley completes an assessment which seeks to identify all types of risks, including those related to environmental factors, such as climate change (e.g. flood risk), land contamination and ecology. These assessments are site specific taking into account the unique characteristics of each development. - Site design: Our Sustainability Standards detail minimum requirements for new developments, including creating a biodiversity net gain, achieving an internal water use of less than 105 litres per person per day, designing for climate change adaptation (e.g. through the use of SuDS) and providing electrical vehicle charging points. - Site development and construction: Berkeley has dedicated sustainability professionals within each of our operating companies, who support project teams by providing advice and driving environmental improvements (e.g. energy and water efficiency). Each site has an environmental risk register and a site sustainability assessment is undertaken by our internal sustainability team at least quarterly to monitor performance. | 60 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements ## WORKPLACE HEALTH & SAFETY Activity metric* Code Data Detail | (1) Total recordable incident | IF-HB-320a.1. (1a) AIIR: 0 | | Annual Injury Incidence Rate (AIIR) per 100,000 people reported | | --- | --- | --- | --- | | rate (TRIR) and (2) fatality | | (1b) AIIR: 106 | inline with UK Health and Safety Executive (HSE) methodology. | | rate for (a) direct employees | | (2a) 0 | Ourcombined rate for direct andcontract employees is 79 | | and (b) contract employees | | (2b) 0 | whichoutperforms the construction sector average of 326 | (HSE,October 2022). ## DESIGN FOR RESOURCE EFFICIENCY Activity metric* Code Data Detail (1) Number of homes IF-HB-410a.1. N/a The HERS® certification standard is not applicable withinthe UK. thatobtained a certified Information on mandatory Environmental Performance Certificate HERS® Index Score and (EPC) ratings is provided as an alternative: (1) All homes legally (2)average score completed by Berkeley in the year had an EPC with an average rating of (2) 84 (‘B’). Note that ratings range from ‘A’ (very efficient) to ‘G’ (inefficient). In the year, 93% legally completed homes were rated B or above. Percentage of installed IF-HB-410a.2. N/a WaterSense® specifications are not applicable within the UK. waterfixtures certified to Theinternal water efficiency of our legally completed homes WaterSense® specifications intheyear is provided as an alternative: Target: 105 litres per person per day. Achieved average: 102.6 litres per person per day. Number of homes delivered IF-HB-410a.3. N/a There are no equivalent multi-attribute green building standards certified to a third-party inthe UK. multi-attribute green building standard Description of risks and IF-HB-410a.4. N/a We design to high fabric efficiency to reduce the energy demand opportunities related to and install water saving fixtures andfittings. A key risk associated incorporating resource with the design ofenergy efficient homes is the unintended efficiency into home design, consequence of overheating and therefore we consideroverall and how benefits are building design and performance. Wehave Sustainability Standards communicated to customers to communicate sustainability with customers at all stages in the purchasing process, from initial marketing brochures todetailed information upon completion of the home. ## COMMUNITY IMPACTS OF NEW DEVELOPMENTS Activity metric* Code Data Detail Description of how proximity IF-HB-410b.1. N/a At Berkeley, proximity to key transport nodes is a factor in the and access to infrastructure, selection of land and the majority of sitesare on brownfield land services, and economic soare located within townsand cities with existing transport and centers affect site selection economic centres. Once the land has been purchased, we have and development decisions commitments within our Sustainability Standards around factors such as sustainable transport. Number of (1) lots and IF-HB-410b.2. (1) 46,096 (79%) Infill sites are defined as vacant or underutilised lots ofland, served (2)homes delivered (2) 3,777 (81%) by existing physical installations such asroads, power lines, sewer oninfillsites and water, and other infrastructure. In line with the SASB definition, our redevelopment sites are only considered infill if they additionally meet this criteria. | (1) Number of homes | IF-HB-410b.3. (1) 4,144 (89%) | | The main types of compact developments delivered by Berkeley | | --- | --- | --- | --- | | delivered in compact | | (2) This data is | are mixed use developments and neighbourhood developments with | | developments and | | not currently | community facilities. | | (2)averagedensity | | analysed | | ## CLIMATE CHANGE ADAPTATION Activity metric* Code Data Detail Number of lots located IF-HB-420a.1. 13,820 (24%) This figure includes lots in areas assigned as Flood Zone 3. in100-year flood zones Weundertake flood risk assessments on everysite as part oftheplanning process and take measures to ensure that the development design takesinto account and mitigates flood risk. Design measures include raising lower floor levels and designing SuDS to manage rainwater by storing it and releasing it into welldesigned natural features to help manage surface water andreduce the impacts of flooding. Description of climate IF-HB-420a.2. N/a Berkeley routinely evaluates climate-related risks and opportunities | change risk exposure | as part of our ongoing risk assessment process. Detailed Climate | | --- | --- | | analysis, degree of | Scenario Analysis was completed in 2021/22. Read more on | | systematic portfolio | pages66 to 73. | exposure, and strategies formitigating risks * All metrics include St Edward joint venture operations 61Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED ## DISCLOSURE ### Climate Action is a key priority within Berkeley’s business ### strategy, Our Vision 2030: Transforming Tomorrow, and ### we continue to develop our approach to this area. Berkeley supports the recommendations We are also planning for the future of the Financial Stability Board’s Task based on emerging guidance such Force on Climate-related Financial asthe draft disclosure framework Disclosures (TCFD). developed by the UK Government’s Transition Plan Taskforce (TPT) andthe International Sustainability Standards Board (ISSB). Climate Action remains a key strategic Climate progress and roadmap ## INTRODUCTION priority for the business and is embedded Berkeley has a long track record of 2010 within Our Vision 2030: Transforming action in relation to climate change. Carbon reduction targets set for Tomorrow. Berkeley is playing an We set our first carbon reduction our operations since the launch active role in addressing this global targets for our operations through the ofOur Vision in 2010. challenge and our climate action original Our Vision business strategy programme is holistic, involving 2014 launched in 2010. Having identified transformational changes to our Climate change adaptation risk flooding, overheating and water shortage business operations and to the identification exercise identified as key issues in our 2014 risk identification waysinwhich we design and flooding, overheating and water exercise, we have also focused on createnew places in partnership shortage as the key risks for the climate change adaptation, creating withour supply chain. homes and places we develop. new homes and places that are more | resilient to the challenges of a warmer | Undertaking Climate Scenario Analysis | 2016 | | --- | --- | --- | | climate, which embrace the great | last year covering both physical and | All new homes designed to | | potential of nature-based solutions. | transition risks enabled us to develop | incorporate climate change | | | our understanding of our exposure to | adaptation measures and | Today, our direct business operations potential risks. In summary, we have abespoke overheating risk are carbon neutral, we procure 100% relatively low exposure to transition assessment launched. renewable electricity in the UK, have risk in the short-term, which could set science-based targets (SBTs) for 2018 moderately rise in the medium-term reducing our scopes 1, 2 and 3 First public disclosure on TCFD. (2030). Our physical risk profile relates greenhouse gas emissions by 2030 to a mix of acute and chronic climate Procurement of 100% renewable and have been awarded an A- rating risks, such as windstorms, flooding electricity for UK operations and for Climate Action and Transparency and heat stress. This year we have voluntary offsetting of residual by CDP. reviewed our strategy against the scopes 1 and 2 emissions via results, confirming that it remained verified projects. relevant, whilst improving our processes 2019 to ensure there is enhanced Group Undertook research and oversight of project-level risks. implemented the outcomes on Over the coming year we will develop designing low carbon homes. our Net Zero Transition Plan to set out 2020 how we will contribute to and prepare SBTs validated bythe SBTi and for a rapid global transition towards new strategy for Climate Action alow GHG-emissions economy. The launched covering five focus areas. guidelines set out by the Transition Plan | Taskforce (TPT) build upon the baseline | 2022 | | --- | --- | | of the TCFD, providing further granularity | Completed detailed Climate | | beyond the TCFD recommended | Scenario Analysis on future climate | | disclosures in some areas. | scenarios to inform our assessment | of risks and opportunities. 2023 Achieved scopes 1 and 2 SBT. Launched embodied carbon reduction targets at a project level. Embedding findings of Climate Scenario Analysis into risk management processes. 62 Berkeley Group 2023 Annual Report Omitted Partial Full Disclosure level This is our sixth disclosure under TCFD and we have reviewed the TCFD Recommendations, including the 2021 Annex Strategic Report Corporate Governance Financial Statements supplemental guidance for materials and buildings. We are pleased to confirm that our disclosures are consistent with these guidelines and align with the UK Listing Rules (as referred to in Listing Rule 9.8.6R(8)), save for certain items which we summarise in the table below. Work is ongoing as our understanding of these areas has developed over the years and we have identified areas where more work is required. Our responses against these areas will develop in future reporting years. Disclosures and Recommendation disclosure level Reference Summary and next steps Governance a) Board’s Page 64 — The Board are provided with updates on Climate Action at oversight each meeting as part of wider Our Vision 2030 reporting. — CEO and CFO attend monthly Our Vision and Sustainability meetings which provide a forum for discussing key actions around Climate Action, including goals and targets. — Climate-related issues are considered within business planning activity focused at a development level, with further work planned in this area in the future. b) Management’s Page 64 — Executive Directors have been assigned climate-related role responsibilities. — Our Vision 2030 and Sustainability Board meetings bi-monthly. — CEO and CFO have oversight of development plans. | Strategy a) Climate-related | | Pages 66 | — Climate change and sustainability are key risks monitored | | --- | --- | --- | --- | | | risks and | to73 | aspart of the wider risk management process. | | | opportunities | | — Climate Scenario Analysis completed across the short-, | medium- and long-term, with financial scenarios and probabilistic loss modelling undertaken where possible. — The Climate Scenario Analysis highlighted key transitional and physical risks. | b) Impact | | Pages 66 | — Material risks are being monitored and initial actions are | | --- | --- | --- | --- | | | ofrisksand | to73 | inplace to implement mitigation measures. | | | opportunities | | — Further work is ongoing to consider the impact of climate- | related issues on areas such as our supply chain. c) Resilience Page 65 — A number of different climate scenarios have been ofstrategy modelled to assess our resilience. — Potential risks and exposure have been highlighted. | Risk | a) Risk | | Page 66 — Climate-related risks recognised as one of the principal | | | --- | --- | --- | --- | --- | | Management | | identification | | risks impacting Berkeley. | | | | processes | | — Main Board, Group Sustainability team and operational | teams all part of the process for assessing risks and relativeimportance. | b) Risk | | Pages 67 | — Operational teams monitor climate-related risks and | | --- | --- | --- | --- | | | management | to73 | opportunities on each development. | | | processes | | — Mitigation measures undertaken at a project level. | | c) Integration | | Page 73 — Climate risk identified as a standalone risk since 2018 | | | | withoverall risk | | aspart of the Berkeley’s approach to risk management. | | | management | | — Annual assessment undertaken as part of the risk | management processes. | Metrics and | a) Metrics to | | Pages 74 | — Relevant metrics identified and disclosed. | | --- | --- | --- | --- | --- | | Targets | | assess risks and | to77 | — Internal carbon price used to drive action. | | | | opportunities | | — An ESG underpin is applicable to the Restricted Share Plan | element of the 2022 Remuneration Policy. Refer to page 136 of the Remuneration Report. — Further work required to develop financial metrics around, for example, activities vulnerable to climate-related risks. b) Scopes 1, 2 Pages 74 — Scopes 1, 2 and 3 emissions monitored and disclosed. and3 GHG to77 — Science-based targets in place across all scopes. emissions andrisks | c) Targets | | Pages 74 | — Relevant metrics identified and disclosed, with additional | | --- | --- | --- | --- | | | tomanage | to77 | metrics available in the ESG metrics table on page 58. | | | risksand | | — Further work is required to develop targets. | opportunities 63Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED ## GOVERNANCE Main Board Level Board of Directors Audit Committee — Overall responsibility for management of climate-related — Oversight of company-wide risk management process, risks and opportunities. including climate action alongside other principal risks. — Annual review of all business risks and opportunities. — Board reports include progress and metrics for climate. Management Level | Named Executive | | Our Vision 2030 and | | Development | | | --- | --- | --- | --- | --- | --- | | Sponsors | | Sustainability Board Meetings | | Oversight | | | | — CEO designated as accountable for | | — Monthly meetings with CEO, CFO, | | — CEO and CFO have involvement with | | | the Climate Action strategic priority | | Board Director responsible for | | the oversight of development plans, | | | under Our Vision 2030. | | sustainability, Head ofResponsible | | from initial land purchase through | | | | | Business and Head ofSustainability. | | allstages of development. | — Karl Whiteman has Board level responsibility for Berkeley’s wider — Climate action is a key topic on each sustainability programme and agenda and a summary of progress oversees the implementation against goals and targets is provided ofouractions. at each meeting. Group level Group Committees and Group Sustainability Group Risk Working Groups Team Function — Bi-monthly Sustainability Committee, — Implementation of our strategy, — Management of Group risk process chaired by the Head of Sustainability monitoring performance, risk and register, including the integration and consisting of a representative management and reporting. of climate change. from each of our businesses. — Cross-disciplinary working groups totake action in specific areas, such as embodied carbon. Operational level Operational Sustainability Development Divisional Management Team Teams Teams — Dedicated sustainability practitioners — Manage day-to-day energy efficiency, — To instil strong governance and within each business to support local implementation of new measures accountability, each management management and development andachievement of targets. team has responsibility for climate teams and help drive continual action in relation to their specific — Project Sustainability Tracker improvement. developments. andSite Environmental Risk Registerin place. — Nominated management sponsor for Climate Action within their business. — Maintains a risk register for their business, which includes sustainability and climate changerisks. Main communications pathways 64 Berkeley Group 2023 Annual Report We have near-term SBTs for GHG This year we have reviewed our strategy Strategic Report Corporate Governance Financial Statements ## STRATEGY | | emissions reduction by 2030 covering | and supporting arrangements against | | --- | --- | --- | | Climate Action is a strategic priority | scopes 1, 2 and 3 which were validated | the findings of the detailed Climate | | for the business within Our Vision | by the SBTi in December 2020. These | Scenario Analysis undertaken last year | | 2030. Our Climate Action strategy is | will help shape our transition to | (see the table below for further details). | | shaped around five focus areas, each | becoming a net zero carbon business | This process identified that the strategy | | with defined targets, to respond to the | in the long-term. | was still relevant and appropriate based | | key areas of risk and opportunities for | | on the risks and opportunities identified. | Berkeley acknowledges the definition of the business. Minor adjustments were made to our net zero launched by the SBTi in 2021, internal processes to ensure that there These are supported by more detailed namely that scopes 1, 2 and 3 emissions is enhanced Group level oversight of Sustainability Standards which set our should be reduced through near-term project-level risks such as subsidence. | minimum requirements across our | SBTs and in the long-term by at least | | | --- | --- | --- | | operations and our supply chain, to | 90%, and that any residual emissions at | Progress against our climate action | | ensure we are aligned to deliver the | the net zero target date are neutralised. | strategy can be found within the Our | | objectives, priorities and milestones | We plan to set out our Net Zero Transition | Vision 2030 section on pages 44 to | | outlined within the strategy. | Plan in the forthcoming year, in line with | 45. Metrics and targets are included | | | this definition and using the disclosure | on page 74. | framework that is being developed by the UK Government’s Transition Plan Taskforce. See page 46 for further details. Climate Action focus areas Risks and opportunities | Focus area Description Why is this a focus? | | | identified | | | --- | --- | --- | --- | --- | | | Scope 3 – category 1 | When we baselined | | — Raw material cost | | | (purchased goods and services) | ouremissions for the | | | development of our SBTs, These carbon emissions relate to Embodied the majority were found theactivities of our supply chain. carbon to relate to embodied Theyarise from the energy used carbon. We have the toextract raw materials, process ability to drive these themintoconstruction materials emissions down through andtransport these to our sites, design, specification and together with the activities of procurement choices to companies who provide a service reduce the quantity and tous(from consultants to architects impact of materials. and contractors working on our sites). | | Scopes 1 and 2 | We directly control these | — Carbon pricing and | | --- | --- | --- | --- | | | This is carbon that is related to our | emissions and have the | emissions offsets | | | own activities. It comes from energy | ability to reduce these. | | | Low carbon | used on construction sites, the | | | | construction | modular facility, sales suites and | | | | sites | inouroffices. | | | | | Scope 3 – category 11 | A significant proportion | — Demand supply | | | (use of sold products) | of our emissions relate to | imbalance | | | | the homes that we are | — Planning and design | This is carbon from the use of energy Low carbon creating for our customers. requirements byour customers. It is associated with homes We have the ability to — Skills shortage impacting energy usage regulated via the Building influence how sustainable ability to install low Regulations (such as heating, hot water they are through design carbon technology and lighting) and excludes usage from and specification. — Technology evolution appliances and plugged in devices. | | Preparing our business for anticipated | We are mindful that | — Heat stress | | --- | --- | --- | --- | | | changes to climate and taking action | climatic changes will | — Drought stress | | | tomitigate the risks. Incorporating | occur and may affect | — Subsidence | | Climate | adaptation measures in the developments | thehomes we build. | — Windstorm | | change | we build to ensure more resilient places | Weconsider anticipated | — Flood | | resilience | for our customers and future residents | changes in our designs to | | | | in decades to come. | seek to mitigate the risks. | | | | In our journey to becoming a net zero | We voluntarily procure | — Carbon pricing and | | | business, we must focus our attention | offsets for scopes 1 and 2 | emissions offsets | | | on reduction, but we are mindful | whilst on our journey | | | Balancing | ofbalancing our impacts from | towards net zero. | | | our impacts | residualemissions. | | | 65Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED ### Engagement The results of the Climate Scenario Time horizons Analysis are still considered to be Our supply chain is key to reducing Risks were assessed against the relevant and we will continue to use our scope 3 emissions. We engage following time horizons: them within our strategic planning with our designers, materials suppliers processes. It is our intention to — Transition risks were assessed and those trade contractors who periodically update the analysis, inrelation to aggressive climate purchase materials on our behalf asnew information and modelling mitigation measures in both tounderstand how to reduce the becomes available and as changes short-term (to 2023) and medium- impact of the buildings. aremade to our land holdings. term (to2030) time horizons, which We also collaborate with industry correlates to the timing horizons ### Scenarios | organisations and initiatives focused | | and target setting within Berkeley’s | | --- | --- | --- | | on improving how companies in the | We have selected climate scenarios | Our Vision 2030 strategy. Transition | | built environment sector impact the | drawing from widely used publicly | risks were not assessed in the longer | | natural world. These include being | available and peer reviewed sources. | term due to the difficulty in building | | apartner member of the UK Green | These include the Intergovernmental | assumptions around the direction | | Building Council and the Supply | Panel on Climate Change (IPCC) sixth | ofpolicy out to 2050 or beyond. | | ChainSustainability School, together | assessment report (AR6) and other | | — Physical risks were assessed over with being an active member of the representative sources including the the long-term to 2050 as this is Construction Leadership Council’s International Energy Agency (IEA). when the most significant impacts Green Construction Board and a The scenarios we have selected are are likely to manifest. founding member of the Wildfowl not intended to be forecasts for the andWetlands Trust Blue Recovery future, but provide mechanisms to ### Leaders Group. Further information assess plausible outcomes against Transition risks onour stakeholder engagement can which Berkeley can assess its risks. ### andopportunities be found on pages 79 to 83. | | For transition risks, the representative | Transition risks occur in response to | | --- | --- | --- | | Climate Scenario Analysis | scenarios assessed are a below 2°C | aggressive climate mitigation to move | | | scenario and limiting global warming | to a less polluting and lower carbon | Berkeley evaluates climate-related to 1.5°C (Net Zero 2050 scenario). economy. With the support of Willis risks and opportunities as part of Where it is possible to differentiate Towers Watson (WTW) and through ourongoing risk assessment process across these two scenarios the discussions with specialists across the with climate change and sustainability assessment focused on the Net Zero business, we identified 14 transition identified as principal operating risks 2050 scenario, in line with the Paris risk and opportunity drivers under that we proactively review and action. Agreement targets. High emissions therecommended TCFD categories Last year, in response to the TCFD and an associated increase in global ofPolicy & Legal, Technology, Market recommendations, we expanded temperatures is expected to generate and Reputation. ourrisk assessment process to changes in acute and chronic weather incorporate future climate scenarios. events that are associated with higher Transition risk and opportunity physical risks. Our scenario analysis on Berkeley assessed: drivers the physical risks therefore selected a Policy and legal | 1. Risks and opportunities relating | | high emissions 4°C scenario, in addition | | | --- | --- | --- | --- | | | tothe transition to a lower | to the 1.5°C (Net Zero 2050 scenario). | — Pricing of GHG emissions | | | carboneconomy | | — Emissions offsets | See the table below for more detail. — Increasingly stringent planning 2. Risks relating to the physical and design requirements impacts of climate change in — Climate change litigation relation to Berkeley’s land — Enhanced emissions reporting holdingsas at 31 October 2021 obligations Technology Summary of scenarios — Electric vehicle (EV) use Net Zero 2050 – 1.5°C scenario — Substitution of existing technologies to lower emission options — Actions are taken to reduce emissions in the short-term and consequently — Skill shortages impacting ability high transition risk is experienced toinstall low carbon technology — Physical risks are less severe than under the 4°C scenario and broadly similar to the 2°C scenario Market Below 2°C scenario — Change in customer demands — Increased cost of raw material — Actions are taken to reduce emissions in the short-term, albeit slightly — Cost of capital lessaggressive than the 1.5°C scenario, and consequently high transition Reputation risk is experienced — Physical risks less severe than under the 4°C scenario and broadly similar — Investment risk to the 1.5°C scenario — Stakeholder risk — Employee risk Hot House World – 4°C scenario — Increased level of warming associated with greater levels of acute and chronic weather events — Geographic climatic shift in the South East of the UK 66 Berkeley Group 2023 Annual Report Exposure Low Medium High Risk Opportunity | Scenario analysis was used to ‘stress- | ofrisks and were quantified based | and increased cost of raw materials | Strategic Report Corporate Governance Financial Statements | | --- | --- | --- | --- | | test’ Berkeley Group’s resilience to | ondata from external and internal | present moderate risk. In the medium- | | | transition risk by considering the level | sources, aligned to Berkeley’s typical | term (2030), Berkeley is more | | | of exposure under a Low Carbon | risk management rating criteria. Given | moderately exposed, partly due to | | | Economy, where temperature rise | the relatively low residual exposure | risks associated with moving to lower | | | would be limited to Well Below 2°C | totransition risk, asset out in the | emission technologies, such as the | | | this century. The analysis concentrated | ensuing table, no update to the | useof less established suppliers and | | | where possible on a 1.5°C scenario | financial assessment forthe 2023 | obsolete technology. Higher costs | | | (i.e.NGFS Net Zero 2050) in line | timehorizon was undertaken during | could also be incurred in 2030 as a | | | withthe Paris Agreement. | the current year. | result of the increasing intensity of | | carbon pricing policy. Whilst not Risks were assessed in terms of Of the risks and opportunities, financially quantified, skills shortages impact and likelihood via a series sevenwere identified as having are expected to be moderate by ofsubject matter expert interviews apotentially greater impact on 2030.Changing customer demands, from Berkeley and follow up Berkeley, albeit none of these are cost of capital, stakeholder risk, and discussions. We assessed these considered individually material in employee risk are all considered to qualitatively, and where possible, thecontext of the Group’s current present minor opportunities. quantified potential impacts. Where year financial statements. Overall the risks allowed for quantification, theGroup has relatively low residual financial scenarios were identified to exposure to transition risk in the understand the potential magnitude short-term, although emissions offset | | | Short-term | | Medium- | | | --- | --- | --- | --- | --- | --- | | | | | 1 | | 1 | | Overview Risk exposure & mitigation | | impact | | term impact | | | Pricing of GHG Emissions | Procurement of REGOs | | | | | | and Emissions offsets | Since 2018, Berkeley has been carbon neutral in its operations | | | | | | Carbon pricing includes | (covering scopes 1 and 2 emissions) through purchasing | £0 – £1.0 | | Could be | | | both direct carbon taxes | 100%renewable electricity in the UK and offsetting remaining | million per | | £0– £1.0 | | | | | annum in | | million per | | | and the cost of offsetting | emissions. Demand for REGOs which Berkeley procures for its | | | | | | | | relation to | | annum in | | | emissions. Aggressive | UK electricity generation is expected to rise. In the short-term | | | | | | | | the cost | | relation to | | | climate mitigation could | the additional cost of REGOs is likely to be less than £1 million. | ofREGOs | | the cost of | | | lead to implementation of | By 2030, the supply of REGOs is expected to stabilise as | | | scopes 1 and | | 2 emissions carbon tax regimes, and electricity use is anticipated to continue to shift away from anincrease in the cost of fossil fuel sources. Beyond 2030 this is emissions offset. Procurement of offsets uncertain, The additional cost of emissions offset for scopes 1 and 2 by but may exceed £10 2030 is likely to beless than £1 million under a 1.5°C scenario, million per based on UK carbon price projections from the Network for annum in Greening theFinancial System (NGFS). the event ofscope 3 Journey to net zero offsets Under Berkeley’s long-term plans to become a net zero business, depending on supply chain actions and technology advances in the meantime, residual scope 3 emissions may need to be offset at a point beyond 2030. This will be confirmed as part of the Net Zero Transition Plan being developed. The cost of this could be significant given the relative size of scope 3 emissions compared to scopes 1 and 2 (see targets and metrics page 74), over £10 million per annum, although this amount and timing thereof is uncertain. Future carbon taxes The introduction of direct carbon taxes through UK regulation in relation to scopes 1 and 2 emissions, if implemented by 2030, would result in a new annual costwhich is likely to be less than £1 million. 67Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED | | | Short-term | | Medium- | | | --- | --- | --- | --- | --- | --- | | | | | 1 | | 1 | | Overview Risk exposure & mitigation | | impact | | term impact | | | Planning and design | Different heating solutions | | | | | | requirements | In the short-term, homes on future phases of developments | | | | | | As part of its effort to | that are under construction may require a different heating | Not | | Not | | | meetits 2050 Net Zero | solution from current planned solutions, for example switching | anticipated | | anticipated | | | | | to be an | | to be an | | | target, it is possible that | to the installation of air source heat pumps. These changes | | | | | | | | impact | | impact | | | theUK will need to increase | have been anticipated so there is little additional cost | | | | | | the stringency of building | impactexpected. | | | | | planning and design Changes in planning regulation requirements. Berkeley In the longer term, planning regulation is not anticipated to would be required to lead to significant costs as emerging requirements will form respond to these changing part of development appraisals at the land purchase stage regulations which may orsubsequently. havea cost impact. Berkeley actively participates in Government consultations relating to future Building Regulations to help shape the direction of future regulation. Skills shortages impacting Industry resourcing ability to install low Berkeley is exposed to industry-wide resourcing issues. carbontechnology Whilst these are currently not specific to low carbon Not Not In order to reduce emissions technology, in the medium-term there could be an increase quantified quantified to meet more stringent inlabour shortages, in part due to an aging workforce planning requirements andthe need to upskill workers for net zero. andsustainability targets Whilst it is not possible to quantify the financial impact of Berkeley will need access thiswe are taking practical steps to mitigate the current skills toskilled workers. shortage. Berkeley is part of The 5% Club, maintaining at least If sufficient investment and 5% of its workforce in formal training and we work with our training is not provided, supply chain to support and encourage training opportunities. there could be a shortfall in Upskilling our people supply of suitably qualified We upskill our staff through internal training modules on professionals. sustainability available via our Learning Management System. This year we ran an energy awareness campaign to educate our people on the low carbon technologies being deployed on our sites and in our homes and how to communicate this to our customers. We continue to be committed to tackling these issues and incorporating our climate action targets into the day-to-day lives of our workforce. Technology evolution Changing energy solutions for our homes The replacement of systems Electrification of residential heating is likely to be that are dependent on fossil encouraged through the Future Homes Standard. Thepace Not Not fuels could result in higher of our progress may be hampered by planning regulations anticipated anticipated to be an to be an costs. and at points in time there is a risk we will not beable to impact impact deliver optimal technologies as the Building Regulations There is also a risk that adjust more slowly to emerging technologies. technologies selected at the outset of a planning process Berkeley continually assesses nascent technologies and has could become outdated already invested in heat pumps and photovoltaics. In some andobsolete upon building cases, particularly in our out of London sites, we are ensuring completion as a result of we put in place the necessary localised infrastructure upgrades thedevelopment of lower to support additional electrical loads ahead of the Future emission alternatives. Homes Standard. Consequently, there are no significant additional costs expected in the short-term. Over the longer-term, increasing pace of Emerging technologies technological adaptation In the longer-term, the inherent risk is that the market for the may accelerate risk of latest technologies is nascent, which gives a risk of unreliable obsolescence. supply chains and reputational damage should technology selected for our developments not perform as expected. Consequently, the potential costs could be significant, although are considered unlikely as regulation and supply chain testing mean the adoption of untested technologies remains improbable. 68 Berkeley Group 2023 Annual Report Exposure Low Medium High Risk Opportunity Strategic Report Corporate Governance Financial Statements | | | Short-term | | Medium- | | | --- | --- | --- | --- | --- | --- | | | | | 1 | | 1 | | Overview Risk exposure & mitigation | | impact | | term impact | | | Raw material cost | A diverse supply chain | | | | | | The cost of raw materials | Berkeley has a diverse supply chain drawing material from | | | | | | could increase if suppliers | awide range of suppliers. Berkeley regularly assesses | £0 – £1.0 | | Uncertain | | | pass through the impact | itsmaterial costs as part of its development appraisals. | million per | | but may | | | | | annum | | exceed £10 | | ofCarbon Pricing for high Rising costs in energy intensive materials million per carbon building materials. annum Under a 1.5°C scenario energy intensive raw materials such For example, widely used assteel, concrete and glass will be particularly impacted by steel, concrete, cement carbon driven cost increases in the absence of alternative andglass all have energy technological advances. In response, Berkeley is undertaking intensive production which embodied carbon studies to better quantify the emissions could require increased within the materials of our developments to inform future energy input costs. design. The marketplace will also evolve as suppliers decarbonise their own direct activities, technology evolves and macro- economic factors impact costs (and house pricing). In the short-term, there is a low exposure to cost increases. Nonetheless, by 2030 the inherent risk from additional raw material costs could be significant (exceeding £10 million per annum) relative to the cost today, although it is inherently difficult to disassociate this cost from other market forces and technology advances (both positive and negative). | Demand supply imbalance | Customer demand for sustainable homes | | | | --- | --- | --- | --- | | There is an inherent risk | Whilst in the short-term the scale of opportunity for higher | | | | that by 2030, as energy | demand is not necessarily significant, increasing climate | Not | Not | | prices increase, property | awareness and Berkeley’s focus on climate action and wider | quantified | quantified | | buyers will favour lower | OurVision 2030 initiatives are anticipated to influence customer | | | | carbon homes and expect | demand positively over the next decade. Berkeley’s focus on | | | | greater energy operational | urban, brownfield regeneration development is also inherently | | | | efficiency. Conversely, | more sustainable. In addition, customer preference for new build | | | | strong sustainability-related | over second-hand housing stock could further support demand | | | | credentials evidenced | for more efficient homes, with the latest technologies. | | | through a proven delivery Responding to the increasing barriers to entry as regulation track record should rapidly changes will require experienced and well capitalised improve the prospects companies; this could further reduce the supply of new homes. ofhigher demand for Berkeley’s homes. 1. Financial impact is shown as increase in costs | In addition to those presented in the | — Climate change litigation may | — Cost and availability of capital | | --- | --- | --- | | table in the preceding pages, there | increase in the future as claims could | could be impacted by climate change | | were a further seven risks and | be brought against companies for | considerations. Last year, Berkeley | | opportunities explored, three of which | alleged contributions to climate | issued a Green Finance Framework | | relate to reputation. WTW and subject | change or a failure to disclose climate | and raised a £400 million Green | | matter experts from various functions | change-related financial risks. We | Bond and £260 million green term | | within the business assessed Berkeley | continue to disclose sustainability | loan under this framework, with | | as having a very low exposure to these, | data in line with climate disclosures | acommitment to continuing our | | as summarised briefly as follows: | such as SASB, TCFD and CDP. | strategy around Climate Action and | thebroader Our Vision 2030 priorities. | Risks | | Opportunities | | | | --- | --- | --- | --- | --- | | | — Enhanced emissions reporting | | — Electric vehicle use will rise, with | — Reputational risk from investors | | | obligations requirements may | | the IEA suggesting that these may | and stakeholders and employee | | | impact the business and supply | | form 30% of all passenger journeys | perceptions are inherent risks which | | | chain by 2030For instance, | | by 2030 under a below 2°C scenario. | Berkeley is exposed to. For Berkeley, | | | thiscould include regulatory | | Berkeley has been an early adopter | this represents a potential opportunity | | | requirements toproduce EPDs | | and is expanding its EV charging | as we maintain our leading position | | | ormaterials passports. Our data | | points alongside the GLA policy and | on sustainability through Our Vision | | | collection process is constantly | | the development of EV infrastructure | 2030 and through the stakeholder | | | under review with additional | | guidance within Building Regulations | engagement we undertake in | | | metrics being assessed each year. | | (Part S). | relation to our developments. | | | Asdata sets expand we are | | | Readmore about our stakeholder | | | exploring the most efficient | | | engagement on pages 79 to 83. | andprecise methodologies tocollect our climate data. 69Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED ### Physical risks Figure 1: UK maximum temperature anomalies under a 1.5°C and 4°C scenario Last year Berkeley undertook a Temperature variance measured against the 1981 – 2000 baseline, comprehensive physical risk analysis UKCP18 projections (June – August) of its land holdings as of 31 October 2021 against current and future 2020s 2040s 2060s 2080s climate scenarios with the support Maximum ofWTW. This year, as there have Temperature beenno significant changes to our Anomaly (°C) land holdings, the findings of the climate scenario analysis are still relevant. We have improved our processes to ensure that we have 1.5° scenario anenhanced oversight of project- related risk related to its findings. 0.5 1.0 The analysis concentrates on a 1.5 longertimescale (to 2050) than 2.0 transition risks (to 2030) given 2.5 physical risks typically manifest 3.0 overalonger period. 3.5 | Alongside a longer timeframe, many | 4° scenario | 4.0 | | --- | --- | --- | | physical risks are likely to increase | | 4.5 | | regionally under higher emissions | | 5.0 | scenarios. Therefore, to assess our riskexposure, we included a climate Exposure assessment Using Geographical Information System scenario focused on the ‘Hot House For each risk category, we have (GIS) tools and an extensive database of World’ which reflects a 4°C rise in undertaken an assessment of building design characteristics for each global temperatures, in addition to exposure. This is the proportion site exposed to flood or windstorm in a1.5°C scenario. This provides an ofhomes in our land holdings that 2050, the potential unmitigated event insight into the impact to our homes willexperience the effects of climate losses were calculated. The benchmarks and developments were the world change, primarily due to climatic used to assess this are defined as a notto meet the conditions of the shiftsthat will impact the whole of ‘severe year’ and an ‘extreme year’, ParisAgreement to limit global ourprimary operating region in the representing probability of 0.5% and warming to well below 2°C and South East of the UK. Berkeley’s 0.1% or a 1 in 200 year return period (a preferably to 1.5°C. It should be developments are considered severe year) and a 1 in 1,000 year return notedthat Governments are exposedin 2050 if they are located period (an extreme year), respectively. alignedtothe less than 2°C scenario. ina geographic area where a climate The figures presented in the acute Under the ‘Hot House World’ scenario, hazard may occur. The degree of risks table below represent physical there is anticipated to be an increased thatexposure is defined by the loss to all sites that formed part of likelihood of a range of acute and frequency and/or severity (intensity) theland holdings at 31 October 2021 chronic climatic events. The analysis of that particular hazard. To identify which comprised around 63,000 showed us that under this scenario potentially material unmitigated homes. It is before any mitigation or broad areas of the UK will see an exposure, WTW utilised well-recognised adaptation measures and irrespective increase in heatwave days, and a models from the insurance industry of insurance or other recovery or corresponding increase in the and UK specific climate data. consideration of financial responsibility occurrence of prolonged drought The tables that follow summarise for any such losses. Berkeley already stress. Increases in precipitation with thepredominant physical risks for insures against potential losses from drier summers and wetter winters both the 1.5°C and 4°C scenarios in catastrophic events and under a 4°C could also increase the prevalence 2050 and focus on the exposure for scenario the primary cost exposure ofsubsidence conditions. Figure 1 the 4°C scenario. forBerkeley could be an increase illustrates heat stress as an example, toinsurance premiums for assets showing the UK maximum summer Probabilistic loss modelling under construction. | time temperature anomalies under | In addition to the exposure analysis, | | --- | --- | | a1.5°C and 4°C scenario compared | afinancial impact assessment of | | toa 1981 – 2000 baseline. | theacute risks (windstorm and | floodevents) was completed to represent the potential unmitigated and uninsured financial impact. This was undertaken through probabilistic modelling utilising insurance market recognised catastrophe risk models. This methodology was performed byWTW and is widely used in the insurance industry to price insurable catastrophic risk when considering insurance premiums. 70 Berkeley Group 2023 Annual Report Chronic risks Strategic Report Corporate Governance Financial Statements Risk identified Present day risk Risk under 1.5°C scenario Risk under 4°C scenario | Heat stress Present day heat stress is very | | Heat stress increases from | Heat stress increases gradually | | --- | --- | --- | --- | | | low throughout the UK such | thecurrent very low level to a | and becomes a moderate risk | | | that all of our sites currently | generally low risk level by 2050. | beyond 2050 towards the end | | | have very low exposure (less | | of the current century. | This could mean over five than five heatwave days in a heatwave days annually. This could mean frequent given year). heatwaves (more than 20daysannually). Berkeley’s exposure in 2050 and beyond under 4°C scenario The majority of England and Wales (in particular South East, South West and the Midlands) will be exposed to more material heat stress by mid-century. Correspondingly, 84% of Berkeley’s homes will be exposed to heat stress in the decades beyond 2050. Berkeley’s actions The potential for overheating in our homes arises through heat stress from climate change and the urban heat island effect. Overheating risk is now incorporated within the 2021 Building Regulations, launched in 2022 with a 12 month transition period. This ensures that all project teams are assessing and mitigating against this risk. Where homes are deemed to be at a higher risk, more detailed dynamic thermal modelling is undertaken. Potential mitigation measures may include thicker insulation to external walls, smaller windows with thermally efficient glass, incorporating shading through the design such as brise soleil to reduce heat gain, balconies and enhanced ventilation. In addition, Berkeley incorporates soft landscaping which can partially mitigate the heat island effect. Risk identified Present day risk Risk under 1.5°C scenario Risk under 4°C scenario | Drought stress Present day drought conditions | | Drought stress conditions | Drought stress becomes more | | --- | --- | --- | --- | | | can be approximated to a | continue to have a relatively | significant by the 2050s, which | | | lowemission scenario in the | low risk (two to three months | would see three to four months | | | short-term. Under such a | ofdrought duration in a year) | of drought duration annually. | | | scenario, all of Berkeley’s | by 2050. | | The main implications from sitescurrently have a very drought stress are water lowexposure to drought (less scarcity and impact on green than two months of drought areas of our developments. duration in a year). Berkeley’s exposure in 2050 and beyond under 4°C scenario Similar to heat stress, the majority of England and Wales (in particular South East, South West andthe Midlands) will be exposed to more material drought conditions by mid-century. Correspondingly, 92% of Berkeley’s homes will be exposed to drought conditions for three to four months annually in the decades beyond 2050. A significantly smaller proportion (5%) of homes could see drought conditions for six months of the year. Berkeley’s actions We reduce water usage by designing water efficient homes with water efficient fixtures and fittings. We follow an integrated water management approach, whereby rainwater is stored and released into natural features to help manage surface water. The management of water run-off through attenuation offers significant opportunities to hold water for reuse in the home and our landscapes. We recently commissioned guidance by the Wildfowl and Wetlands Trust (WWT) for our teams on integrating blue and green infrastructure into our developments. We also consider the impact of drought on the design of our green spaces by incorporating drought resilient planting. Berkeley’s Sustainability Standards are in place to set minimum water efficiency measures and standards for areas such as rainwater harvesting and SuDS for all project teams. 71Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED Chronic risks continued Risk identified Present day risk Risk under 1.5°C scenario Risk under 4°C scenario | Subsidence Present day ground conditions | | Subsidence conditions and | Subsidence conditions and | | --- | --- | --- | --- | | | mean that building design | susceptibility for soils like clay | susceptibility for soils like clay | | | addresses the risk of subsidence, | are likely to be influenced in | are likely to be influenced in | | | with current regulations for | the2030s and further increase | the2030s and further increase | | | high-rise buildings catering | beyond 2050 due to warmer | beyond 2050 due to warmer | | | fordesign tolerance. | and drier summers as well as | and drier summers as well as | | | | wetter winters. | wetter winters. | Berkeley’s exposure in 2050 and beyond under 4°C scenario Large areas in the South East and Eastern England are exposed to increasing subsidence conditions, including Greater London and the Thames Estuary due to the clay soils. The soil conditions for 90% of Berkeley’s current homes could potentially be impacted beyond 2050. Berkeley’s actions The risk of subsidence is assessed at a project level prior to land acquisition. During detailed design, external experts undertake further assessment and ensure appropriate measures are incorporated to mitigate these risks. In London, where the risk of subsidence is linked to the underlying London clay, our developments have piled foundations which are engineered to ensure the buildings are anchored deep into the ground. There are additional factors of safety margins for foundations/piling already in place which mitigates against the risk of subsidence. For our housing developments, the foundation design is agreed with specialist consultants to ensure it is appropriate for the underlying geology and risk of subsidence. Acute risks Risk identified Present day risk Risk under 1.5°C scenario Risk under 4°C scenario Windstorm Present day exposure to There is no current scientific There is no current scientific windstorm already exists consensus that the UK will consensus that the UK will forallof Berkeley’s sites. seean increase in windstorm seean increase in windstorm intensity and the risk therefore intensity and the risk therefore The main implication from remains unchanged from the remains unchanged from the windstorms are physical present day. present day. damage to completed property and construction assets. Berkeley’s exposure in 2050 and beyond under 4°C scenario The typical windstorm hazard could pose a moderate risk for 100% of Berkeley’s sites. This doesnot reflect a change to the present day levels of exposure or probability of such risk. Probabilistic loss modelling There is no current scientific evidence that windstorm intensity and frequency in the UK under a4°C scenario will lead to a significant change in potential losses from the present day risk that Berkeley’s sites already face. Berkeley’s actions Each of our developments is designed by specialist teams, selecting appropriate materials andfixing details which can withstand local conditions. In respect of mid-rise to high rise buildings, wind engineering includes dynamic or physical modelling, analysis and testing at thepre-planning stage. Façade design ensures mechanical fixings to areas such as roofs and balconies to resist elements being removed by high wind, as well as other mitigating features suchas screening and planting. In terms of the occupation of our buildings, mitigation includes wind alerts from anemometers being communicated to residents with instructions to close windows and secure loose objects from high level amenity spaces. High winds also pose a risk to construction operations. We monitor alerts for high wind events and send bulletins to our site teams ahead of storms to ensure site safety measures are adhered to. Our tower cranes are fitted with anemometers to alert the crane driver and safe lifting team, thus preventing crane operations during high winds. 72 Berkeley Group 2023 Annual Report Acute risks continued Strategic Report Corporate Governance Financial Statements Risk identified Present day risk Risk under 1.5°C scenario Risk under 4°C scenario | Flood In present day conditions, | | Across the UK, peak river flows | Under this scenario it is | | --- | --- | --- | --- | | | only6% of Berkeley’s sites | are expected to increase by | projected that peak river | | | aredeemed to be materially | 2050 and beyond, with the | flowsin the South East will | | | exposed to flooding (between 1 | South East expected to | increase significantly (by 33%) | | | in 100 and 1 in 500 probability), | experience fluvial peak flow | in the 2050s leading to an | | | given the predominance of | increases of 8%. | increase inriver flooding. | Berkeley’s portfolio in London Consequently, the risk of There would likely be increased and the flood defences in place floodexposure could slightly exposure to coastal flooding in London. increase compared to the from sea level rise, as well as The main implication from present day conditions. surface and groundwater floodis physical damage flooding from heavy rainfall. tocompleted property andconstruction assets. Berkeley’s exposure in 2050 and beyond under 4°C scenario By 2050 there are no further sites exposed beyond the 6% of sites already at risk in the presentday. However, the exposure to flooding may increase for these particular sites which could therefore flood more often. Probabilistic loss modelling The modelling estimates that by 2050 the physical damage from flooding under a 4°C scenario could exceed £27 million in a severe year (i.e. 1 in 200 year return period) and £60 million in an extreme year (i.e. a 1 in 1,000 year return period). Berkeley’s actions Flood risk is assessed pre-acquisition for all sites. Flood risk assessments have been a standard part of our development planning and design for many years if the developments fall within a flood zone. The flood risk assessments vary in extent based on the potential risk and already include allowances for the effects of climate change. Our homes are designed to the flood risk that is identified in the flood risk assessment. This includes designing to a 1 in 30 year, 1 in 100 year or 1 in 1,000 year flood. Within our developments, design mitigation measures include raising the levels of the lower floors and designing SuDS to hold and store water in times of extreme rainfall. This year we have taken action to ensure Group oversight of project-level flood risk, in line with our reported SASB disclosure (see page 60). ## RISK MANAGEMENT | We recognise climate-related risks as | Climate risk information is updated | To instil strong governance and | | --- | --- | --- | | one of the principal risks impacting | atleast annually by the Head of | accountability within Berkeley’s | | Berkeley, and since 2018 it has been | Responsible Business and Head of | autonomous operating companies, | | identified as a standalone risk. Our | Sustainability. Changes to the risk | each management team has | | climate-related risk management | levelare based on a range of factors | responsibility for climate action in | | process is aligned to our broader | such as emerging legislation (e.g. | relation to their specific developments | | strategic processes. To read more | TheFuture Homes Standard) and | and have a nominated management | | about Berkeley’s approach to risk | customer feedback. This information | sponsor within their business. | | management and how we manage | isprovided to the Board through | | Each operating company maintains a risksee pages 86 to 89 of the incorporation into the Group’s risk risk register for their business, which Strategic Report. register. The in-depth Climate includes sustainability and climate Scenario Analysis undertaken The Board takes overall responsibility change risks, whilst at a development lastyearfurther informed our for risk management (including climate level, the Project Sustainability Tracker riskassessment processes and risks) and the Audit Committee ensures and Environmental Risk Register wasoverseen by Karl Whiteman the effectiveness of risk management identify risks and monitor action taken. andthe CFO. and internal controls onbehalf of theBoard. 73Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED ## METRICS AND TARGETS Berkeley monitors 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 and 2) on pages 159 to 161 and the ESG performance table on pages 58 to 59. Our key metrics for climate action are our SBTi validated SBTs measuring emissions against a 2019 baseline. | Scopes 1 and 2 emissions | decrease has largely been driven by an | | | --- | --- | --- | | Science-based target: reduce | increase in the use of biodiesel HVO | | | absolute scopes 1 and 2 GHG | (Hydrotreated Vegetable Oil) on our | 76% | | emissions by 50% by FY2030 | construction sites; 95% of fuel directly | | ## reduction fromaFY2019 baseline year. purchased for use in the year has been this low carbon alternative. Further since our baseline year FY2019 We are pleased to report that we have information on our scopes 1 and 2 achieved our absolute scopes 1 and 2 emissions, including our methodology, (market-based) emissions target is contained within the Directors’ seven years early, exceeding our 50% Report on pages 159 to 161. reduction target with a 76% decrease since the baseline year of 2019. The Link to | | | Baseline | | focus | | | --- | --- | --- | --- | --- | --- | | Metric Unit 2023 2022 | | | 2019 | areas Link to key risks | | | Absolute scopes 1 and 2 | | | | | - GHG emissions | | (market-based) emissions tCO | 2 e 963 2,211 3,980 | | | | pricing | | Percentage change in emissions | | | | | - Emissions | | compared to FY2019 (SBT base year) % -76 -44 – | | | | | offsets | Energy consumption associated with scopes 1 and 2 emissions MWh 30,420 36,335 35,681 Energy consumption from renewable sources % 89 76 60 2023 information has been separately subject to limited assurance by KPMG LLP. Further details of the assurance providedin2023,including the independent assurance report and our methodology for reporting emissions, can befoundatwww.berkeleygroup.co.uk/sustainability/reports-and-case-studies Construction activity at Lombard Square, Plumstead 74 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Scope 3 emissions Since our 2019 baseline year, there hasbeen a 6% decrease in emissions Science-based target: reduce scope ## intensity against our science-based 6% 3 purchased goods and services and target to reduce by 40% by 2030. ## use of sold products GHG emissions reduction by 40% per square metre of legally We have been taking actions to since our baseline year FY2019 completed floor area. improve our understanding and thedata accuracy of these impacts We recognise that our most since we set our SBTs. Reductions significant impacts, around 99%, inemissions from dedicated action occur across our value chain (scope taken at a project level can take 3), including the activities of our sometime to be realised, due to there supply chain (‘embodied carbon’) and often being several years between the energy use by our customersin theplanning phase of a project and homes once sold (‘lowcarbon homes’). legal completions occurring. However, we are of the view that the results of workunderway now will lead to demonstrable reductions in the future. Use of sold products Hollyfields, Hawkenbury (scope 3: category 11) We continue to use the Dwelling Emission Rate (DER), calculated for homes in line with Government’s Standard Assessment Procedure (SAP) methodology to estimate the carbon impact of our homes over their lifetime (60 years in line with industry best practice guidance). We anticipate significant reductions in this area in the coming years in light of the more stringent Building Regulations which became effective in June 2022 (with aone-year transition period) and the forthcoming Future Homes Standard expected to be required from 2025. Our understanding of emissions reporting in this area and that of the wider industry is evolving and we expect further data enhancements in the future. For example, our current methodology does not take into account the anticipated decarbonisation of the UK electricity grid over the 60-year lifetime of the homes. With the update of the Building Regulations and forthcoming Future Homes Standard we are also cognisant of the likely change in SAP methodology to use primary energy, accompanied by apotential preference in the future for energy intensity in use to be a more representative metric of emissions from homes than the DER. We will continue to work with industry as the methodology develops and ensure ourreporting reflects the prevailing and accepted methodology. 75Berkeley Group 2023 Annual Report ## TCFD RECOMMENDED DISCLOSURE CONTINUED Table A – Scope 3 emissions using updated methodology (CEDA Global) | | | | Baseline | | | Link to | | | --- | --- | --- | --- | --- | --- | --- | --- | | Metric Unit 2023 2022 | | | | 2019 | focusareas Link to key risks | | | | Absolute scope 3 emissions | | | | | | | — GHG emissions | | (categories 1 and 11) tCO | | 2 e 574,709 638,017 585,690 | | | | | pricing | | Scope 3 emissions intensity tCO | 2 e/100 sq m 161 177 171 | | | | | | — Emissions | offsets Percentage change in emissions intensity compared to FY2019 — Planning (SBT base year) % -6 4 – anddesign requirements Absolute emissions for category 1: | Purchased goods and services tCO | | | 2 e 321,314 369,515 352,087 | | — Skills shortages | | --- | --- | --- | --- | --- | --- | | Emissions intensity for category 1: | | | | | — Technology | | Purchased goods and services tCO | | 2 e/100 sq m 90 103 103 | | | evolution | | Absolute emissions for category 11: | | | | | — Raw material | | Use of sold products tCO | | | 2 | 253,395 268,502 233,603 | cost | | Emissions intensity for category 11: | | | | | — Physical | | Use of sold products | tCO | 2 /100 sq m 71 74 68 | | | climaterisk | 2023 information has been separately subject to limited assurance by KPMG LLP. Further details of the assurance providedin2023,including the independent assurance report and our methodology for reporting emissions, can befoundatwww.berkeleygroup.co.uk/sustainability/reports-and-case-studies | Embodied carbon | inmaterial delivery data collation at | During the year, CEDA launched an | | --- | --- | --- | | (scope 3: category 1) | asite level. Through these steps we | updated database ‘CEDA Global’ which | | When setting our SBT in 2020 we | plan to evolve our reporting away | provides multi-regional input-output | | adopted a methodology based upon | from the spend-based methodology | (MRIO) information, including UK- | | spend data to estimate the embodied | towards more specific material data | specific conversion factors for the first | | carbon of materials and this remains | calculations in future years. | time. Compared to CEDA v5.0 which | | our primary methodology for external | | had a 2014 base year, emission factors | Recognising that the reliable reporting reporting. We recognise the limitations in CEDA Global have a 2018 base year. of embodied carbon data is an issue of reporting embodied carbon emissions The new factors take into account facing wider industry, we are actively based on spend data alone, and therefore theeffect of global decarbonisation working as part of the UK Green have carried out 23 detailed embodied activities since 2014 and are based on Building Council (UKGBC) and Future carbon assessments in the last two additional region-specific data sources, Homes Hub working groups to define a years, studying the impact of the such as emission factors published by standardised approach moving forward. design of the buildings and material the Department for Environment, Food At a global scale, in May 2023 the choices and quantities. These assessments and Rural Affairs (DEFRA). Together Science Based Targets initiative (SBTi) are now undertaken as standard practice with macroeconomic changes, launched a consultation for the buildings at planning and design stages, enabling improvements in global GHG emissions industry to ensure the criteria and our project teams to make more informed understanding and calculations, and guidance for building companies to set decisions and to take tangible action efficiencies in technologies along with science-based targets are robust, clear, toreduce the carbon impact of each an improved use of renewable energy and practical. We are pleased to have development. sources, there has been a significant responded to the consultation to aid drop in the conversion factors from In any financial year the challenge we – thedevelopment of the guidance due CEDA v5.0 to CEDA Global. | and others in the industry – face is to | for publication in autumn 2023. We | | | --- | --- | --- | | demonstrate the impact of a number | welcome further clarification on this | Whilst we continue to improve our | | ofdifferent developments at different | topic and agreement on a consistent | understanding of carbon reporting | | stages in the project lifecycle, each with | methodology for calculation and | and our practices to reduce the | | a complex and often global supply chain | reporting across the sector. | impact of our site activities, we have | | of materials. This issue is compounded | | adopted this newest database for | We continue to use Comprehensive at Berkeley by our bespoke approach enhanced data quality. However, for Environmental Data Archive (CEDA) todevelopment, with each site having maximum transparency, and to ease which is listed by the GHG Protocol aunique design and procurement comparison for readers, we have asan available third-party database undertaken locally by each of our presented our emissions under both toassist users in collecting data for operating businesses, and by the CEDA v5 and CEDA Global this year product lifecycle and corporate value lengthof time our developments span. for all years presented, including our chain (scope 3) GHG inventories to SBT base year (2018/19). These are Using a combination of our spend convert our spend data to emissions. shown in Table A, with calculations dataand more detailed data from under the previous CEDA v5.0 shown thesite-specific assessments, we are in Table B for transparency. now in a position to better understand the embodied carbon of our buildings. Weare also investigating improvement 76 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Table B – Scope 3 emissions using previous methodology (CEDA v5.0) Baseline Metric Unit 2023 2022 2019 Absolute scope 3 emissions (categories 1 and 11) tCO 2 e 1,077,251 1,125,843 1,096,682 Scope 3 emissions intensity tCO 2 e/100 sq m 302 312 321 Percentage change in emissions intensity compared to FY2019 (SBT base year) % -6 -3 – Absolute emissions for category 1: Purchased goods and services tCO 2 e 823,856 857,341 863,079 Emissions intensity for category 1: Purchased goods and services tCO 2 e/100 sq m 231 238 253 Absolute emissions for category 11: Use of sold products tCO 2 253,395 268,502 233,603 Emissions intensity for category 11: Use of sold products tCO 2 /100 sq m 71 74 68 We also have broader targets with associated metrics as part of our climate action roadmap: Link to focus | Target Metric Unit 2023 2022 | | areas Link to key risks | | | --- | --- | --- | --- | | Maintain | Purchased electricity backed | | — GHG emissions | | carbonneutral | byREGOs % 98.7 99.0 | | pricing | | operations | | | — Emissions | Purchased electricity in the UK across scopes 1 offsets backed by REGOs % 100 100 and 2 emissions using REGOs Number of verified carbon credits andverified procured for voluntary offsetting # 1,011 2,322 carbon credits Percentage of scopes 1 and 2 (market-based) emissions offset by verified carbon credits % 100 100 | Implement | Completed homes in regions with | — Heat stress | | --- | --- | --- | | measures to | High or Extremely High Baseline | — Drought stress | | manage climate | Water Stress % 89 85 | | risks for our Average water efficiency developments ofhomescompleted lpppd 102.6 104.2 and business Live development sites that have sustainable drainage systems (SuDS) % 100 92 Live development sites that haveassessed overheating risk % 76 68 | Reduce scope 3 | Completed homes with | | | — Planning and | | --- | --- | --- | --- | --- | | use of sold | anEPCrated A or B % 93 89 | | | design | | products GHG | | | | requirements | | | Average Dwelling Emission Rate | kgCO | 2 / | | | emissions | | | | — Skills shortages | | | (DER) of completed homes | m2/yr 12.13 12.85 | | | — Technology Average percentage improvement evolution in DER over Target Emission Rate (TER) for completed homes % 31 31 Completed homes with an Environmental Impact Rating (EIR)of B or above % 98 – 77Berkeley Group 2023 Annual Report ## NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT ### The following table summarises where our non-financial information can be ### found in our Annual Report and within our policies available on our website: | Reporting | Where to read more in this report to understand the impact | | Relevant policies in place | | --- | --- | --- | --- | | requirement | onthe business, and the outcome of applying our policies | | that govern our approach | | Environmental | Our Vision 2030: Climate Action and Nature | 44 to 49 | — Sustainability Policy | | matters | | | — Climate Change Policy | | | TCFD Recommended Disclosure | 62 to 77 | | — Sustainable Specification | | SASB Disclosure | 60 to 61 | | andProcurement Policy | | --- | --- | --- | --- | --- | | | Stakeholder Engagement: Environment | | 81 | | | | ESG Performance | 58 to 59 | | | | Climate-related | Our Vision 2030: Climate Action | 44 to 47 | | — Climate Change Policy | | financial | | | | — Sustainability Policy | | | TCFD Recommended Disclosure | 62 to 77 | | | disclosures SASB Disclosure 60 to 61 Directors’ Report: Scopes 1 and 2 Greenhouse 159 to 161 Gas Emissions and Energy Consumption Employees Our Vision 2030: Employee Experience 50 and 52 — Employee Policy andFuture Skills — Apprenticeships and Skills Development Policy Stakeholder Engagement: Employees 80 — Equality and Diversity Policy | | ESG Performance | 58 to 59 | — Health and Safety Policy | | --- | --- | --- | --- | | Respect for | Our Vision 2030: Employee Experience | 50 and 53 | — Modern Slavery Statement | | human rights | andSupply Chain | | — Human Rights, Modern Slavery | andChild Labour Policy Stakeholder Engagement: Employees 80 to 81 — Equality and Diversity Policy andSupply Chain — Whistleblowing Policy | | Corporate Governance Report: | | | 115 | — Sustainable Specification | | --- | --- | --- | --- | --- | --- | | | Whistleblowing | | | | andProcurement Policy | | Social matters Our Vision 2030: Quality, Communities, | | 41, 42 to 43, | | | — Sustainability Policy | | | Employee Experience, Future Skills, Supply | | 50, 52, 53, | | — Apprenticeships and Skills | | | Chain and Shared Value | | 54 to 55 | | Development Policy | — Sustainable Specification The Berkeley Foundation 56 to 57 andProcurement Policy Economic Contribution 55 Stakeholder Engagement: Communities and 80 to 81 Local Government, Employees, Supply Chain | Anti-bribery | Corporate Governance Report: Bribery Act | 115 — Anti-Bribery and Corruption Policy | | | --- | --- | --- | --- | | and anti- | and Anti-Money Laundering Regulations | | — Business Ethics Policy | | corruption | | | — Corporate Hospitality and | Promotional Expenditure Policy — Whistleblowing Policy — Anti-Facilitation of Tax Evasion Policy How we How We Manage Risk 86 to 99 manage risk | | TCFD Recommended Disclosure | 62 to 77 | | | --- | --- | --- | --- | | Business model Our Business Model | | 10 to 11 | | | | Committed to Brownfield Regeneration | | 4 to 5 | | Non-financial | Non-Financial KPIs | 14 to 15 | | KPIs 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 ESG Performance 40 to 54 Scan the QR code The Long-Term Sustainable Value We Create 83 toreadmore online 78 Berkeley Group 2023 Annual Report ## 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 sections 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 pages 115 to 121. Strategic Report Corporate Governance Financial Statements the likely consequences of any decisions in the long-term the need to foster the Company's business relationships with suppliers, customers and others the desirability of the Company maintaining a reputation of high standards of business conduct the interests of the Company's employees the impact of the Company's operations on the community and environment the need to act fairly between members of the Company Culture and values The culture and values of the business are continuously considered by the Directors when discharging their duties to ensure they are embedded into the business. ☑ Read more on: pages 112 to 113. Business model and strategy 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. ☑ Read more on: page 83. Risk management The Directors on the Board are responsible for setting and monitoring the risk appetite for the business. ☑ For more detail of risk management see 'How we manage risks' on: pages 86 to 99 Stakeholder engagement The Directors engage directly with stakeholders in a number of different ways, and as frequently as they can. The table 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 ☑ For more detail on Customers see pages 40, 80 and 83. ☑ For more detail on Communities and local government see pages 44 to 45, 80 and 83. ☑ For more detail on Employees see pages 50, 80, 82 and 83. ☑ For more detail on Supply chain see pages 53, 81 and 82. ☑ For more detail on Government, regulators and industry see pages 81 to 82. ☑ For more detail on Investors see page 81. ☑ For more detail on Environment see pages 81 to 82. Berkeley Group 2023 Annual Report 79 ## ENGAGING WITH OUR STAKEHOLDERS Our key stakeholder groups CUSTOMERS COMMUNITIES AND EMPLOYEES SUPPLY CHAIN GOVERNMENT, EQUITY AND DEBT ENVIRONMENT Placing the customer at LOCAL GOVERNMENT Creating a positive working Ensuring responsible REGULATORS INVESTORS Reducing negative impacts theheart of every decision, Making a positive environment and promoting procurement and collaborative AND INDUSTRY Delivering long-term and working towards all the way through the contribution to the health, wellbeing and inclusion delivery through engagement Working in partnership to sustainable financial returns environmental net gain development process communities in which we and effective communication at shape a delivery environment work through engagement all levels with our supply chain which creates the conditions and partnership working for growth and supports highquality homebuilding and placemaking | What matters to them —A bespoke, tailored service | | — Delivering high quality homes | — Delivering positive outcomes | — Early engagement and the | — The delivery of private and | — Secure financial investment | — Reduction of environmental | | --- | --- | --- | --- | --- | --- | --- | --- | | | that responds to their needs. | and places that improve | for local communities. | ability to feed into the project | affordable homes. | that provides sustainable | impact from both construction | | | — Providing customers with | people’s quality of life. | — Pride in creating great places | programme and logistics. | — Regenerating brownfield land. | risk-adjusted returns over | activities and longer-term | | | regular updates on the | — Meaningful engagement over | and high quality homes. | — High standards of health, | — High standards of design and | thelong-term. | through the developments | | | progress of their home. | development design and wider | — Career progression. | safetyand welfare. | build quality. | — High standards of | wecreate. | | | — Providing their new home on | placemaking and community | — Competitive pay. | — Receiving feedback on their | — Heritage conservation. | Environmental, Social and | — Global impacts via the | | | time and making them feel | development. | — Health, safety and wellbeing. | tenders and understanding the | — High safety standards of | Governance (ESG) issues, | supplychain. | | | special and valued. | — Influencing development to | — Equity, diversity and inclusion. | pipeline of future opportunities. | operational and building safety. | particularly climate change. | — Movement towards having a | | | — High quality specification | deliver local priorities and | — The increasing cost of living | — Payment in a timely manner. | — Delivering economic growth | | positive environmental impact. | | | andconstruction. | positive outcomes. | and travel costs. | — Being treated as an extended | and job opportunities. | | — Representation on behalf of | | | — Quick rectification of any | — Securing inward investment, | — Employee benefits. | part of the project team. | — Tackling climate change, | | the natural environment by | | | problems that arise. | growth and job and training | | —Building long-term relationships | biodiversity loss and other | | local planning authorities, | | | — Energy prices are becoming | opportunities. | | with us. | environmental challenges. | | theEnvironment Agency | | | more important. | — Minimising negative impacts, | | — Inflationary pressures and | | | andgrassroots organisations. | | | — Clear and timely | such as traffic and noise. | | theimpact of global issues | | | | | | communication throughout | — Respect for local priorities, | | onmarkets. | | | | | | their customer journey. | heritage and culture. | | | | | | | How we engage — Each customer has a dedicated | | — Site-specific consultation and | — Our autonomous businesses | — Through our Supply Chain | — Responding to policy and | — Twice yearly equity investor | — Directly with local planning | | | point of contact from their initial | engagement strategies seek | lead a range of engagement | Portal which includes our | regulatory consultations. | road shows led by the CEO | authorities, who then consult | | | enquiry through to exchange, | out contributions from a | initiatives including staff | health and safety and | — Maintain constructive | andCFO. | relevant regulators such as the | | | completion and beyond. | representative mix of local | conferences, staff surveys | sustainability standards. | dialogueat a senior | — One-to-one meetings, often | Environment Agency, Natural | | | — Customers are encouraged to | people and stakeholders. | and‘sessions with the | — Throughout the tender | levelwithGovernment | combined with site visits, | England and water authorities | | | provide feedback at any stage. | — Engagement starts pre- | management’, which | processwith frequent | departments,agencies | enabling investors to view | on development proposals. | | | — Six weeks after a customer has | planning and we nurture | includesQ&As with the | communication from our | andregulatory bodies. | thebusiness operations. | — With the public via our | | | completed on their new home | lasting, collaborative | Managing Director and/or | commercial team, together | — Engaging with well-regarded | — Structured shareholder | partnership with the | | | they are given the opportunity | relationships throughout | management team. | with formal tender meetings. | think tanks, academic | consultations on key | Considerate Constructors | | | to complete a detailed, | project delivery. | — Through our Group People | — Pre-start meetings before site | institutions and the wider | governance matters, such as | Scheme. | | | independent survey covering | — Engagement includes open | Committee. | works commence. | policy community. | capital returns, remuneration | — With industry organisations | | | all aspects of their experience, | days, community design | — Bi-annual Group-wide | — Regular site meetings, signage | — Active membership of | policy and Board composition. | and initiatives, including the | | | from the home and the | workshops, presentations | employee surveys undertaken | and ‘toolbox talks’. | collaborative initiatives and | — Equity analyst briefings. | UKGBC, the Supply Chain | | | development to the levels of | tolocal groups, one-to-one | as part of the Investor in | — Dedicated Director-level Trade | membership bodies, including | | Sustainability School, the | | | service they received. | meetings, door knocking, | Customers Gold award. | Sponsors provide a platform | the Construction Leadership | | Construction Leadership | | | — On some developments we run | walking tours, pre-application | — New graduates and | for engagement. | Council, World Green Building | | Council’s Green Construction | | | more detailed focus groups. | planning meetings, exhibitions, | apprentices meet the senior | — Through corporate | Council, UKGBC, Supply Chain | | Board and the Wildfowl and | | | — Direct engagement between | Design Review Panels, | management team as part of | memberships and industry | Sustainability School, Natural | | Wetlands Trust Blue Recovery | | | senior management teams and | newsletters, notices, | their induction and are given | groups, such as Chartered | England’s Developer Forum, | | Leaders Group. | | | Main Board and customers if | advertising, surveys, site- | the opportunity to attend a | Institute of Procurement and | CCS, Supply Chain | | — By responding to consultations, | | | any key issues arise. | specific websites and a mix | Q&A session with the CEO. | Supply Construction Leaders | Sustainability School, | | research and innovation, for | | | — Through our online portal, | ofdigital consultation and | — Through our staff intranet | Group, the Supply Chain | Construction Industry Advisory | | example Government | | | MyHome Plus, via which they | engagement tools. | andYammer, which provides | Sustainability School and | Committee, New London | | consultations on changes to | | | have access to information, | — Some developments have | updates and key information. | Construction Leadership Council | Architecture and the London | | the Building Regulations and | | | videos and progress updates. | dedicated community | | Product Availability Group. | Chamber of Commerce. | | Biodiversity Net Gain. | | | | engagement specialists who | | — Divisional events such as | — Senior management engaging | | — Through our supply chain to | | | | expand our local networks and | | supplier days and conferences. | in public debate via | | understand the environmental | | | | ensure we address local needs. | | | conferences and roundtables. | | credentials of materials. | | Actions and outcomes —Prompt resolution of issues. | | — The creation of enduring | — Developed a new Competency | — Long-term, collaborative | — The alignment of our business | — An operating model that | — Incorporation of key | | | — Continued innovation to | localpartnerships based | Framework to support all | supply chain partnerships | strategy and delivery model | recognises the risks of an | environmental targets and | | | ensurewe are providing | onshared objectives for | employees in understanding | which ensure that we can make | with long-term national and | inherently cyclical housing | actions into our business | | | aspirational homes with | thecommunity’s future. | the expectations of their role | full use of the expertise and | local policy objectives such as | market and operational | strategy, Our Vision 2030. | | | leadingspecifications. | — Bespoke masterplans and | and to help them and their line | specialist skills of our suppliers. | brownfield regeneration, high | complexities of the sites | — Inclusion of Our Vision 2030 | | | — Senior level review of | placemaking strategies | managers with career planning. | — Procurement on overall value | quality new homes, affordable | wedevelop. | and Sustainability within Main | | | eachcustomer survey, | whichreflect local views, | — Health and wellbeing is | rather than cost alone. | housing, climate action, safety | — A focus on financial strength | Board reporting and bi- | | | withtargeted actions. | aspirations and concerns. | important for our people and | —Compliance and buy-in around | and social value. | and resilience. | monthly Board-level meetings | | | — Sales & Marketing and | — Site-specific Community | over the past two years we | our site safety, quality, ethics, | — Research, trials and | — Investing in land holdings to | on the topic. | | | Customer Service Committees | Plansto create social links | have rolled out further | human rights and environmental | implementation of solutions | ensure sufficient pipeline and | — Clear standards for our project | | | review any trends in customer | andintegration with the | improvements to our divisional | standards and behaviours. | tothese key public policy | value-added development | teams, covering all aspects of | | | feedback and identify areas | widercommunity. | wellbeing strategies, such as | — Prompt payment of suppliers, | challenges. | opportunities for the Group. | our operations and the homes | | | forimprovement. | — Prioritising local people | health insurance for all and | as a signatory to the Prompt | — Publication of our methods so | — Securing forward sales which | and developments we create, | | | —Consistent achievement of | fortraining and job | more agile working. | Payment Code. | others can apply our learning, | underpins the upfront | with additional focus areas on | | | world-class levels of customer | opportunities on our sites. | — Developed our approach to | — Issue trade-specific | including our biodiversity net | investment into our sites. | environmental management | | | satisfaction as recorded through | — Partnerships with local | Equity, Diversity and Inclusion | opportunity schedules every | gain toolkit and Safer by | — Balance Sheet strength | and resource use. | | | the NPS and ‘recommend to a | charities and good causes | and registered with external | six months to provide the | Design framework, delivered | andliquidity. | — A dedicated team of | | | friend’ figures. | which improve community life. | initiatives such as the Race at | supply chain with visibility | inpartnership with RoSPA. | — Disclosure of both financial | sustainability practitioners | | | — Maintaining an Investor in | — Responsible and respectful | Work charter and Disability | offuture work. | — Active contribution to public | andnon-financial information | taking action at a local level | | | Customers Gold rating. | construction activities through | Confident employer scheme to | — Working with our supply chain | debate around housing | covering a range of ESG topics. | ona daily basis. | | | — Considering energy efficiency | registration of every site with | provide aframework for future | to help mitigate the risks | delivery and meet with | | — The reporting of our impact | | | and the right energy strategy | the Considerate Constructors | action. | around financial stability. | regulators and policy makers to | | publicly across a range | | | for the home, whilst | Scheme, which independently | — Provide a range of learning and | | share insights into key business | | ofindicators. | | | accommodating existing | assesses our conduct. | development opportunities, | | and market-related matters. | | | | | regulations and investigating | | hosted by our in-house training | | | | | | | emerging technology. | | venue, the Berkeley Academy. | | | | | 80 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements Our key stakeholder groups CUSTOMERS COMMUNITIES AND EMPLOYEES SUPPLY CHAIN GOVERNMENT, EQUITY AND DEBT ENVIRONMENT Placing the customer at LOCAL GOVERNMENT Creating a positive working Ensuring responsible REGULATORS INVESTORS Reducing negative impacts theheart of every decision, Making a positive environment and promoting procurement and collaborative AND INDUSTRY Delivering long-term and working towards all the way through the contribution to the health, wellbeing and inclusion delivery through engagement Working in partnership to sustainable financial returns environmental net gain development process communities in which we and effective communication at shape a delivery environment work through engagement all levels with our supply chain which creates the conditions and partnership working for growth and supports highquality homebuilding and placemaking | What matters to them —A bespoke, tailored service | | — Delivering high quality homes | — Delivering positive outcomes | — Early engagement and the | — The delivery of private and | — Secure financial investment | — Reduction of environmental | | --- | --- | --- | --- | --- | --- | --- | --- | | | that responds to their needs. | and places that improve | for local communities. | ability to feed into the project | affordable homes. | that provides sustainable | impact from both construction | | | — Providing customers with | people’s quality of life. | — Pride in creating great places | programme and logistics. | — Regenerating brownfield land. | risk-adjusted returns over | activities and longer-term | | | regular updates on the | — Meaningful engagement over | and high quality homes. | — High standards of health, | — High standards of design and | thelong-term. | through the developments | | | progress of their home. | development design and wider | — Career progression. | safetyand welfare. | build quality. | — High standards of | wecreate. | | | — Providing their new home on | placemaking and community | — Competitive pay. | — Receiving feedback on their | — Heritage conservation. | Environmental, Social and | — Global impacts via the | | | time and making them feel | development. | — Health, safety and wellbeing. | tenders and understanding the | — High safety standards of | Governance (ESG) issues, | supplychain. | | | special and valued. | — Influencing development to | — Equity, diversity and inclusion. | pipeline of future opportunities. | operational and building safety. | particularly climate change. | — Movement towards having a | | | — High quality specification | deliver local priorities and | — The increasing cost of living | — Payment in a timely manner. | — Delivering economic growth | | positive environmental impact. | | | andconstruction. | positive outcomes. | and travel costs. | — Being treated as an extended | and job opportunities. | | — Representation on behalf of | | | — Quick rectification of any | — Securing inward investment, | — Employee benefits. | part of the project team. | — Tackling climate change, | | the natural environment by | | | problems that arise. | growth and job and training | | —Building long-term relationships | biodiversity loss and other | | local planning authorities, | | | — Energy prices are becoming | opportunities. | | with us. | environmental challenges. | | theEnvironment Agency | | | more important. | — Minimising negative impacts, | | — Inflationary pressures and | | | andgrassroots organisations. | | | — Clear and timely | such as traffic and noise. | | theimpact of global issues | | | | | | communication throughout | — Respect for local priorities, | | onmarkets. | | | | | | their customer journey. | heritage and culture. | | | | | | | How we engage — Each customer has a dedicated | | — Site-specific consultation and | — Our autonomous businesses | — Through our Supply Chain | — Responding to policy and | — Twice yearly equity investor | — Directly with local planning | | | point of contact from their initial | engagement strategies seek | lead a range of engagement | Portal which includes our | regulatory consultations. | road shows led by the CEO | authorities, who then consult | | | enquiry through to exchange, | out contributions from a | initiatives including staff | health and safety and | — Maintain constructive | andCFO. | relevant regulators such as the | | | completion and beyond. | representative mix of local | conferences, staff surveys | sustainability standards. | dialogueat a senior | — One-to-one meetings, often | Environment Agency, Natural | | | — Customers are encouraged to | people and stakeholders. | and‘sessions with the | — Throughout the tender | levelwithGovernment | combined with site visits, | England and water authorities | | | provide feedback at any stage. | — Engagement starts pre- | management’, which | processwith frequent | departments,agencies | enabling investors to view | on development proposals. | | | — Six weeks after a customer has | planning and we nurture | includesQ&As with the | communication from our | andregulatory bodies. | thebusiness operations. | — With the public via our | | | completed on their new home | lasting, collaborative | Managing Director and/or | commercial team, together | — Engaging with well-regarded | — Structured shareholder | partnership with the | | | they are given the opportunity | relationships throughout | management team. | with formal tender meetings. | think tanks, academic | consultations on key | Considerate Constructors | | | to complete a detailed, | project delivery. | — Through our Group People | — Pre-start meetings before site | institutions and the wider | governance matters, such as | Scheme. | | | independent survey covering | — Engagement includes open | Committee. | works commence. | policy community. | capital returns, remuneration | — With industry organisations | | | all aspects of their experience, | days, community design | — Bi-annual Group-wide | — Regular site meetings, signage | — Active membership of | policy and Board composition. | and initiatives, including the | | | from the home and the | workshops, presentations | employee surveys undertaken | and ‘toolbox talks’. | collaborative initiatives and | — Equity analyst briefings. | UKGBC, the Supply Chain | | | development to the levels of | tolocal groups, one-to-one | as part of the Investor in | — Dedicated Director-level Trade | membership bodies, including | | Sustainability School, the | | | service they received. | meetings, door knocking, | Customers Gold award. | Sponsors provide a platform | the Construction Leadership | | Construction Leadership | | | — On some developments we run | walking tours, pre-application | — New graduates and | for engagement. | Council, World Green Building | | Council’s Green Construction | | | more detailed focus groups. | planning meetings, exhibitions, | apprentices meet the senior | — Through corporate | Council, UKGBC, Supply Chain | | Board and the Wildfowl and | | | — Direct engagement between | Design Review Panels, | management team as part of | memberships and industry | Sustainability School, Natural | | Wetlands Trust Blue Recovery | | | senior management teams and | newsletters, notices, | their induction and are given | groups, such as Chartered | England’s Developer Forum, | | Leaders Group. | | | Main Board and customers if | advertising, surveys, site- | the opportunity to attend a | Institute of Procurement and | CCS, Supply Chain | | — By responding to consultations, | | | any key issues arise. | specific websites and a mix | Q&A session with the CEO. | Supply Construction Leaders | Sustainability School, | | research and innovation, for | | | — Through our online portal, | ofdigital consultation and | — Through our staff intranet | Group, the Supply Chain | Construction Industry Advisory | | example Government | | | MyHome Plus, via which they | engagement tools. | andYammer, which provides | Sustainability School and | Committee, New London | | consultations on changes to | | | have access to information, | — Some developments have | updates and key information. | Construction Leadership Council | Architecture and the London | | the Building Regulations and | | | videos and progress updates. | dedicated community | | Product Availability Group. | Chamber of Commerce. | | Biodiversity Net Gain. | | | | engagement specialists who | | — Divisional events such as | — Senior management engaging | | — Through our supply chain to | | | | expand our local networks and | | supplier days and conferences. | in public debate via | | understand the environmental | | | | ensure we address local needs. | | | conferences and roundtables. | | credentials of materials. | | Actions and outcomes —Prompt resolution of issues. | | — The creation of enduring | — Developed a new Competency | — Long-term, collaborative | — The alignment of our business | — An operating model that | — Incorporation of key | | | — Continued innovation to | localpartnerships based | Framework to support all | supply chain partnerships | strategy and delivery model | recognises the risks of an | environmental targets and | | | ensurewe are providing | onshared objectives for | employees in understanding | which ensure that we can make | with long-term national and | inherently cyclical housing | actions into our business | | | aspirational homes with | thecommunity’s future. | the expectations of their role | full use of the expertise and | local policy objectives such as | market and operational | strategy, Our Vision 2030. | | | leadingspecifications. | — Bespoke masterplans and | and to help them and their line | specialist skills of our suppliers. | brownfield regeneration, high | complexities of the sites | — Inclusion of Our Vision 2030 | | | — Senior level review of | placemaking strategies | managers with career planning. | — Procurement on overall value | quality new homes, affordable | wedevelop. | and Sustainability within Main | | | eachcustomer survey, | whichreflect local views, | — Health and wellbeing is | rather than cost alone. | housing, climate action, safety | — A focus on financial strength | Board reporting and bi- | | | withtargeted actions. | aspirations and concerns. | important for our people and | —Compliance and buy-in around | and social value. | and resilience. | monthly Board-level meetings | | | — Sales & Marketing and | — Site-specific Community | over the past two years we | our site safety, quality, ethics, | — Research, trials and | — Investing in land holdings to | on the topic. | | | Customer Service Committees | Plansto create social links | have rolled out further | human rights and environmental | implementation of solutions | ensure sufficient pipeline and | — Clear standards for our project | | | review any trends in customer | andintegration with the | improvements to our divisional | standards and behaviours. | tothese key public policy | value-added development | teams, covering all aspects of | | | feedback and identify areas | widercommunity. | wellbeing strategies, such as | — Prompt payment of suppliers, | challenges. | opportunities for the Group. | our operations and the homes | | | forimprovement. | — Prioritising local people | health insurance for all and | as a signatory to the Prompt | — Publication of our methods so | — Securing forward sales which | and developments we create, | | | —Consistent achievement of | fortraining and job | more agile working. | Payment Code. | others can apply our learning, | underpins the upfront | with additional focus areas on | | | world-class levels of customer | opportunities on our sites. | — Developed our approach to | — Issue trade-specific | including our biodiversity net | investment into our sites. | environmental management | | | satisfaction as recorded through | — Partnerships with local | Equity, Diversity and Inclusion | opportunity schedules every | gain toolkit and Safer by | — Balance Sheet strength | and resource use. | | | the NPS and ‘recommend to a | charities and good causes | and registered with external | six months to provide the | Design framework, delivered | andliquidity. | — A dedicated team of | | | friend’ figures. | which improve community life. | initiatives such as the Race at | supply chain with visibility | inpartnership with RoSPA. | — Disclosure of both financial | sustainability practitioners | | | — Maintaining an Investor in | — Responsible and respectful | Work charter and Disability | offuture work. | — Active contribution to public | andnon-financial information | taking action at a local level | | | Customers Gold rating. | construction activities through | Confident employer scheme to | — Working with our supply chain | debate around housing | covering a range of ESG topics. | ona daily basis. | | | — Considering energy efficiency | registration of every site with | provide aframework for future | to help mitigate the risks | delivery and meet with | | — The reporting of our impact | | | and the right energy strategy | the Considerate Constructors | action. | around financial stability. | regulators and policy makers to | | publicly across a range | | | for the home, whilst | Scheme, which independently | — Provide a range of learning and | | share insights into key business | | ofindicators. | | | accommodating existing | assesses our conduct. | development opportunities, | | and market-related matters. | | | | | regulations and investigating | | hosted by our in-house training | | | | | | | emerging technology. | | venue, the Berkeley Academy. | | | | | 81Berkeley Group 2023 Annual Report ## ENGAGING WITH OUR STAKEHOLDERS CONTINUED ### EMPLOYEES Development of a competency A new competency framework has framework been developed in response to this Feedback received from employees feedback, and to meet the emerging within our most recent staff survey requirements of the Building Safety highlighted the need to focus on Act. The competency framework will growth and career paths, together ensure we are creating a supportive with management skills and training. environment in which our people can perform to their best. It will also help us to equip our highly accomplished functional specialists to become effective managers and leaders. ### SUPPLY CHAIN | 360-degree feedback | The feedback will now be used | | --- | --- | | This year we invited 360 degree | toshape our procedures as they | | feedback from over 100 of our trade | evolve as part of our commitment | | contractors, representing 80% of our | toworking in partnership with our | | typical key trade spend. Valuable | supply chain. A key outcome as a | | feedback was obtained from 55 | result of the feedback is to adopt | | contractors on our operational | Build UK's Common Assessment | | capability, relationship compatibility, | Standard (CAS) as a consistent | | health and safety, contracting tender | methodology for contractors working | | process and ESG requirements. | across the industry. This will reduce the | administrative burden for contractors wishing to work with us. ### GOVERNMENT, REGULATORS AND INDUSTRY Playing an active role in building Taking this key industry role safety across the industry willenable us to directly engage Throughout the year, we have withgovernment, regulators engaged with government and andtheindustry and also be industry on a number of topics, attheforefront in ensuring mostnotably building safety. implementation of requirements andbest practice within our Berkeley is represented on the day-to-day project activities. leadership team of the Construction Leadership Council (CLC) and acts as the Industry Sponsor for Building Safety. ### ENVIRONMENT | Co-hosting the | The conference brought together | | --- | --- | | biodiversityconference | around 500 delegates from across | | We are proud to have led the industry | government, local authorities, | | on biodiversity net gain, having made | industry and the conservation sector | | it a mandatory requirement for all new | to share and shape best practice. | sites since May 2017. Our track record Berkeley continues to lead the in this area facilitated our selection by industry in this area and we are Natural England to co-host a large evolving our approach to biodiversity conference in March 2023 environmental net gain. ahead of the mandatory requirement for all new sites to achieve biodiversity net gain in November 2023. 82 Berkeley Group 2023 Annual Report ## THE LONG-TERM SUSTAINABLE VALUE WE CREATE Strategic Report Corporate Governance Financial Statements ### CUSTOMERS COMMUNITIES AND EMPLOYEES ### LOCAL GOVERNMENT Satisfying customers Prioritising health, safety and Creating thriving neighbourhoods wellbeing as well as increased knowledge and skills through training and development | 79.2 | £560m | 31% | | --- | --- | --- | | Net Promoter Score compared | of subsidies provided to deliver | managers are female, together | | toanindustry average of 42 | affordable housing and committed to | with37% of our employees overall | | (HBF,March 2023) | wider community and infrastructure | | benefits in the year | 97.5% | | 86% | | 79 | | --- | --- | --- | --- | --- | | of customers would recommend us | | of homes delivered on | | Annual Injury Incidence Rate (AIIR) | | to a friend compared to an industry | | brownfield land in the year | | compared to an industry average | | average of 90% (HBF, March 2023) | | | | of326 (HSE, October 2022) | | | Read more on: page 40 | | Read more on: page 42 | Read more on: page 50 | ### SUPPLY CHAIN EQUITY AND GOVERNMENT, REGULATORS ### DEBTINVESTORS AND INDUSTRY Ensuring relationships are underpinned by trust and Strong, sustainable risk-adjusted Delivering on our promises and partnership returns for shareholders working responsibly to deliver quality homebuilding and sustainable placemaking ## 30 days £254m taken on average to pay suppliers shareholder return in the financial year, £283m per annum committed through to 2025 | 55 | 18.7% | £2.6bn | | --- | --- | --- | | key contractors responded to | pre-tax return on equity for | contribution to UK GDP during the | | our360 degree feedback process | theyearended 30 April 2023 | year, with £13.8 billion contributed | | covering a range of topics from | | inthe last five years | operational capability, the tender process, health and safety, modern slavery and sustainability Read more on: page 53 Read more on: pages 30, 133, 204and 217 Read more on: page 55 ### ENVIRONMENT Taking action on climate and making a measurable contribution to the natural environment | 23 | 100% | >550 | | --- | --- | --- | | embodied carbon assessments | renewable electricity for UK | acres of new or measurably | | ofourbuildings, to support our | activitiessince May 2017 | improvednatural habitats across | | understanding of scope 3 emissions | | 54biodiversity net gain sites | and our science-based targets Read more on: pages 44 to 45 Read more on: pages 48 to 49 83Berkeley Group 2023 Annual Report ## BROWNFIELD REGENERATION IN ACTION ## GRAND UNION ## BRENT Above: The Northfields Industrial Estate before regeneration Right: After regeneration, Grand Union today 84 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements 85Berkeley Group 2023 Annual Report ## HOW WE MANAGE RISK ### The assessment of risk and embedding risk management ### throughout Berkeley are key elements of setting and ### delivering the Group’s strategy. Risk appetite Cyclical market Autonomy and values The Board is responsible for Berkeley’s business model is centred Berkeley has recognised brands setting and monitoring the on the Board’s appreciation of the andautonomous, talented and riskappetite for Berkeley. Risk risks of the cyclical market in which experienced teams who embrace appetite relates to the amount the business operates, where market Berkeley’s values in their approach. ofrisk the Company may seek sentiment and transaction levels can Berkeley creates bespoke and oraccept at any given time when change quickly, requiring us to adopt innovative solutions for each site pursuing its strategic objectives, a flexible approach to our investment which requires experienced, inthe context of the prevailing decisions. This can be dependent on intensive management. operating environment. The where the Board believes we are Board’sapproach to, and appetite within any particular cycle. for risk issummarised opposite. Operational complexity Financial strength The business model also recognises This translates into an approach that, the complexity of the planning at all times through the cycle, keeps anddelivery of the sites Berkeley financial risk low, recognising the undertakes, alongside their capital operational risks within the business. intensive nature. It mitigates this risk Through our strong financial position by focusing its activities in London we are therefore able to take, under and the South East, recognising the normal circumstances, increased importance of relationships and local operational risk to deliver robust knowledge and having highly skilled risk-adjusted returns, within the and experienced teams in place. parameters of our business model. | Culture and purpose | Emerging risks | | --- | --- | | Berkeley’s unique culture is the | Berkeley faces a number of | | sumof its shared values, vision | uncertainties that have the | | andoverarching sense of purpose. | potential to be materially | | Together, they have a dynamic and | significantto our long-term | | energising effect on the way the | strategy but cannot be fully | | business operates, shaping our | definedas a specific risk at | | purpose, long-term Our Vision | present,and therefore cannot | | 2030business strategy, brand and | befully assessed or managed. | | day-to-day behaviours. Our culture | These emerging risks typically | | sets the standards by which we | havea long time horizon and | | judge our behaviours, products | arediscussed and agreed by | | andinternal processes. | theBoard on a regular basis. | 86 Berkeley Group 2023 Annual Report ## PRINCIPAL RISKS Strategic Report Corporate Governance Financial Statements In accordance with provisions of Risk management framework the2018 UK Corporate Governance Our approach to risk management combines a top-down strategic review Code, the Directors have carried out and feedback of risks by the Board, coupled with a bottom-up review and arobust assessment of the emerging reporting of risk by each operating business. and principal risks facing the Group, including those that would threaten its ### OUR TOP-DOWN APPROACH business model, future performance, solvency or liquidity. There are also areas of our existing principal risks that are evolving over time. Board The Board takes overall responsibility for risk management, and the The Group’s risk appetite is reviewed assessment of risk. Embedding risk management into the business is annually and approved by the Board. akeyelement of setting and delivering our strategy. This review guides the actions we take to implement our strategy. The top-down assessment of risk by the Board includes a review of the external environment in which Berkeley operates, which complements the The Board is conscious of the ongoing deep seated knowledge of the industry and operations by the Executive elevated volatility in the operating Committee members. This takes into account the likelihood and impact of environment and the Group’s business risks, whether pre-existing or emerging, which may materialise in the short model and risk management approach or longer-term. ensures we are agile and responsive to evolving market conditions. As such, Emerging risks are also considered at each Board meeting and are then our risk appetite remains dynamic feddown to the operating businesses for further review and consideration, andrespectful of the cyclical nature if applicable. ofour industry and the risks and opportunities this presents. Audit Committee The Audit Committee has responsibility for ensuring the effectiveness of The principal operating risks and risk management and internal controls on behalf of the Board. The controls ourapproach to mitigating them and processes surrounding how we assess risk across the Group are explained aredescribed in more detail on further in the Audit Committee Report on pages 128 to 131. pages90 to 99. 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 that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. ### OUR BOTTOM-UP APPROACH 87Berkeley Group 2023 Annual Report ## FINANCIAL RISKS ### Exposure to financial risks ### Management of financial risks The financial risks to which Berkeley Berkeley adopts a prudent approach to managing these financial risks. isexposed include: Treasury policy and central overview Liquidity risk The Board approves treasury policy and senior management control The risk that the funding required daytoday operations. Relationships with banks and cash management forthe Group to pursue its activities areco-ordinated centrally as a Group function. The treasury policy is may not be available. intended to maintain an appropriate capital structure to manage the Market interest rate risk financial risks identified and provide the right platform for the business The risk that Group financing activities tomanage its operating risks. are affected by fluctuations in market interest rates. Forward sales Berkeley’s approach to forward selling new homes to customers provides Market credit risk good visibility over future cash flows, as expressed in cash due on forward The risk that counterparties (mainly sales which stands at £2.1 billion at 30 April 2023. It also helps mitigate customers) will default on their market credit risk by virtue of customers’ deposits held from the point contractual obligations, resulting in a ofunconditional exchange of contracts with customers. loss to the Group. The Group’s exposure to credit risk is comprised of cash and Low gearing cash equivalents, loans to joint ventures The Group is currently financing its operations through shareholder equity, and trade and other receivables. supported by £410 million of net cash on the Balance Sheet and debt Other financial risks facilities. This in turn has mitigated its current exposure to interest rate risk. Berkeley contracts all of its sales Land holdings andthe vast majority of its purchases By investing in land at the right point in the cycle, holding a clear development in sterling, and so has no significant pipeline in our land holdings and continually optimising our existing holdings, exposure to currency risk, but does we are not under pressure to buy new land when it would be wrong for the recognise that its credit risk includes long-term returns for the business. receivables from customers in arange of jurisdictions who are themselves Headroom provided by bank facilities exposed to currency riskin contracting The Group has £800 million of committed credit facilities maturing in sterling. inFebruary 2028, with an optional extension to February 2029. This comprises a green term loan of £260 million and the revolving credit facility of £540 million. In addition, the Group has listed debt in the form ofGreen Bonds to the value of £400 million maturing in August 2031. 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. 88 Berkeley Group 2023 Annual Report ## VIABILITY STATEMENT Strategic Report Corporate Governance Financial Statements Cash due on forward sales have been The Directors have made this viability ### In accordance with sustained during the year and are assessment over a three year period ### Provision 31 of the 2018 | | £2,136 million at 30 April 2023, | from 1 May 2023 to 30 April 2026. | | --- | --- | --- | | UKCorporate Governance | compared to £2,171 million 12 months | TheGroup’s cash flow forecasting is | | Code, the Directors have | ago. The Group’s land holdings now | undertaken on a longer time frame, | | | comprise an estimated £7.6 billion of | but the Directors are mindful of the | ### assessed the longer-term future gross margin across approximately progressively unreliable nature of ### viability of the Group. 58,000 future homes. forecasting in later years, particularly in the context of the discretionary Berkeley has a unique long-term Berkeley’s approach to risk management nature of future investment and the business model that is responsive and its risk appetite are set out on pages historically cyclical housing market. tothe cyclical nature of the housing 86 to 88 of the Strategic Review. The Furthermore, the Group’s cash due market and focuses on large-scale majority of risks are operational innature, onforward sales cover the next three developments. Reflecting this, with risk management appropriately financial years and these are the key Berkeley’s financial strategy focuses embedded in the business processes focus of the business activity under on using our development expertise and controls. The development level the viability assessment. to maximise the returns from our cash flow forecasts, which are used to assets, creating the right development prepare the Group’s consolidated cash Based on the assessment, the Directors solution for each site. Financial flow forecasts, take account of each confirm that they have a reasonable strength is therefore a core risk sites operational circumstances and expectation that the Group will be able management principle for Berkeley risks. The Group’s consolidated cash to continue in operation and meet its and is evident in: flow forecasts include appropriate liabilities as they fall due over the three allowances for discretionary investment year period commencing 1 May 2023. — The scale of land holdings which and the quantum and timing of this is means we can acquire land Read more on our going concern in turn subject to the delivery of the selectivelyat the right point in the onpage 162. individual site operational cash flows cycle and reflecting the prevailing and overall strategy for the Group. operating environment — Focus on long-term regeneration The viability assessment envisages developments which provide the asevere but plausible deterioration in scope to create value through the economic outlook which will impact the market cycle site level cash flows used to prepare the — A strong planning position Group’s forecasts, principally through providesvisibility on delivery lower sales volumes and pricing. In andprotects against regulatory response to such a downside scenario, riskin thenear-term Berkeley would focus on cash generating — The cash due on forward sales activities. These would comprise a which underpins near and medium- myriad of mitigating combinations of term delivery and cash flows actions, but the key principles modelled — An appropriate net cash position for the viability assessment include: andliquidity provided through — Production effort re-focused to debtcapacity those buildings with forward sales The Group’s net cash has increased enabling the cash due on forward from £269 million at the start of the sales of £2,136 million to be collected, year to £410 million at 30 April 2023 subject to a risk allowance. which, coupled with the debt capacity — Deferral of build activity on new of £1,200 million, ensures Berkeley buildings or sites, whilst all discretionary hastotal liquidity of £1,610 million investment is suspended at30 April 2023. The debt capacity — Sales transaction levels and comprises £400 million of listed pricingreduce significantly unsecured Green Bonds which throughout the viability period maturein August 2031, supported — Cost reductions are realised across byFitch Ratings Ltd’s senior unsecured both build and overhead costs, investment grade rating of BBB- withalready committed land and (StableOutlook), and corporate planning related costs being met borrowing facilities of £800 million, — Shareholder returns beyond including a £260 million green term thealready announced six- loanand £540 million revolving credit monthlyreturn for the period to facility. These committed borrowing 30 September 2023 suspended facilities are in place until February 2028 with one remaining one year extension option available. 89Berkeley Group 2023 Annual Report ## RISKS Impact | | | | Residual | | | | change | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Link to | | risk | Likelihood | | during | | Commentary and developments | | Risk description and impact Approach to mitigating risk | | strategy: | rating: | | | change: | | year: | if any during the year | | As a property developer, Berkeley’s | Recognition that Berkeley operates in a cyclical market is | | | High | | | | | The UK economy grew marginally in the first quarter of 2023, having narrowly | ### Economic business is sensitive to wider economic central to our strategy and maintaining a strong financial avoided a recession at the end of 2022. The economy continues to be affected ### outlook factors such as changes in interest position is fundamental to our business model and protects by inflation, interest rate rises, cost of living pressures and ongoing strike rates, employment levels and general us against adverse changes in economic conditions. action, and remains smaller than levels seen before the Covid pandemic. consumer confidence. Land investment in all market conditions is carefully targeted Whilst inflation has fallen from record highs, the rate of decrease has been Some customers are also sensitive and underpinned by demand fundamentals and a solid slower than expected, and it is now forecast that interest rates may have to tochanges in the sterling exchange viability case. rise further from the current rate of 4.5% to try and reduce the rate of inflation rate in terms of their buying decisions more quickly. Levels of committed expenditure are carefully monitored or ability to meet their obligations against forward sales secured, cash levels and headroom Read more on pages 20 to 27. under contracts. against our available bank facilities, with the objective of Changes to economic conditions in keeping financial risk low to mitigate the operating risks the UK, Europe and worldwide may ofdelivery in uncertain markets. lead to a reduction in demand for Production programmes are continually assessed, housing which could impact on depending upon market conditions. The business theGroup’s ability to deliver its iscommitted to operating at an optimal size, with a corporate strategy. strongBalance Sheet, through autonomous businesses tomaintain the flexibility to react swiftly, when necessary, to changes in market conditions. Significant political events in the Whilst we cannot directly influence political events, the High Political uncertainty remains as the government continues to address the ### Political UKand overseas, may impact risks are taken into account when setting our business impact of the pandemic and the UK’s ongoing economic volatility. The global ### outlook Berkeley’s business through, for strategy and operating model. In addition, we actively political environment also remains uncertain, heightened by the ongoing war example, supplychain disruption or engage in the debate on policy decisions. in Ukraine. This volatility is likely to remain over the next 18 months in the run the reluctance of customers to make up to the next general election. purchase decisions due to political Government policy on housing clearly impacts the operating environment uncertainty and, subsequently, policies forBerkeley. and regulation may be introduced that directly impact our business model. There continues to be conflicting messaging from government over their approach to residential development. Whilst it is positive that they are promoting regeneration of brownfield land, other policy interventions are impacting the supply of new homes. Read more on pages 20 to 27. Adverse changes to Government Berkeley is primarily focused geographically on London, High Government legislation has continued to increase in the year with potential ### Regulation policy on areas such as taxation, Birmingham and the South East of England, which limits forthis to continue in the future with further associated regulation. design requirements and the our risk when understanding and determining the impact On 30 January 2023, DLUHC published the final form of the Self Remediation environment could restrict the ability ofnew regulation across multiple locations and jurisdictions. Contract, which formalised the commitment made under the developer of the Group to deliver its strategy. The effects of changes to Government policies at all pledge, which Berkeley signed by the due date of 13 March 2023. This sets Failure to comply with laws and levelsare closely monitored by operating businesses outthe terms by which developers will remediate legacy buildings, or fund regulations could expose the Group andthe Board, and representations made to policy- their remediation in certain circumstances. topenalties and reputational damage. setterswhere appropriate. In late December 2022, DLUHC published a consultation paper proposing Berkeley’s experienced teams are well placed to interpret anumber of amendments to Approved Document B of the Building Safety and implement new regulations at the appropriate time Regulations, including proposals requiring two staircases in new tall through direct lines of communication across the Group, buildingsabove 30m in height. with support from internal and external legal advisors. We are reviewing the implications for this on our current schemes, including the likely transitional arrangements. Read more on pages 20 to 27. 90 Berkeley Group 2023 Annual Report Key to strategy Key to risk Customers Quality Communities Climate Action Nature Increase risk No change Strategic Report Corporate Governance Financial Statements Employee Modernised Future Supply Shared Decrease risk Experience Production Skills Chain Value Impact | | | | Residual | | | | change | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Link to | | risk | Likelihood | | during | | Commentary and developments | | Risk description and impact Approach to mitigating risk | | strategy: | rating: | | | change: | | year: | if any during the year | | As a property developer, Berkeley’s | Recognition that Berkeley operates in a cyclical market is | | | High | | | | | The UK economy grew marginally in the first quarter of 2023, having narrowly | ### Economic business is sensitive to wider economic central to our strategy and maintaining a strong financial avoided a recession at the end of 2022. The economy continues to be affected ### outlook factors such as changes in interest position is fundamental to our business model and protects by inflation, interest rate rises, cost of living pressures and ongoing strike rates, employment levels and general us against adverse changes in economic conditions. action, and remains smaller than levels seen before the Covid pandemic. consumer confidence. Land investment in all market conditions is carefully targeted Whilst inflation has fallen from record highs, the rate of decrease has been Some customers are also sensitive and underpinned by demand fundamentals and a solid slower than expected, and it is now forecast that interest rates may have to tochanges in the sterling exchange viability case. rise further from the current rate of 4.5% to try and reduce the rate of inflation rate in terms of their buying decisions more quickly. Levels of committed expenditure are carefully monitored or ability to meet their obligations against forward sales secured, cash levels and headroom Read more on pages 20 to 27. under contracts. against our available bank facilities, with the objective of Changes to economic conditions in keeping financial risk low to mitigate the operating risks the UK, Europe and worldwide may ofdelivery in uncertain markets. lead to a reduction in demand for Production programmes are continually assessed, housing which could impact on depending upon market conditions. The business theGroup’s ability to deliver its iscommitted to operating at an optimal size, with a corporate strategy. strongBalance Sheet, through autonomous businesses tomaintain the flexibility to react swiftly, when necessary, to changes in market conditions. Significant political events in the Whilst we cannot directly influence political events, the High Political uncertainty remains as the government continues to address the ### Political UKand overseas, may impact risks are taken into account when setting our business impact of the pandemic and the UK’s ongoing economic volatility. The global ### outlook Berkeley’s business through, for strategy and operating model. In addition, we actively political environment also remains uncertain, heightened by the ongoing war example, supplychain disruption or engage in the debate on policy decisions. in Ukraine. This volatility is likely to remain over the next 18 months in the run the reluctance of customers to make up to the next general election. purchase decisions due to political Government policy on housing clearly impacts the operating environment uncertainty and, subsequently, policies forBerkeley. and regulation may be introduced that directly impact our business model. There continues to be conflicting messaging from government over their approach to residential development. Whilst it is positive that they are promoting regeneration of brownfield land, other policy interventions are impacting the supply of new homes. Read more on pages 20 to 27. Adverse changes to Government Berkeley is primarily focused geographically on London, High Government legislation has continued to increase in the year with potential ### Regulation policy on areas such as taxation, Birmingham and the South East of England, which limits forthis to continue in the future with further associated regulation. design requirements and the our risk when understanding and determining the impact On 30 January 2023, DLUHC published the final form of the Self Remediation environment could restrict the ability ofnew regulation across multiple locations and jurisdictions. Contract, which formalised the commitment made under the developer of the Group to deliver its strategy. The effects of changes to Government policies at all pledge, which Berkeley signed by the due date of 13 March 2023. This sets Failure to comply with laws and levelsare closely monitored by operating businesses outthe terms by which developers will remediate legacy buildings, or fund regulations could expose the Group andthe Board, and representations made to policy- their remediation in certain circumstances. topenalties and reputational damage. setterswhere appropriate. In late December 2022, DLUHC published a consultation paper proposing Berkeley’s experienced teams are well placed to interpret anumber of amendments to Approved Document B of the Building Safety and implement new regulations at the appropriate time Regulations, including proposals requiring two staircases in new tall through direct lines of communication across the Group, buildingsabove 30m in height. with support from internal and external legal advisors. We are reviewing the implications for this on our current schemes, including the likely transitional arrangements. Read more on pages 20 to 27. 91Berkeley Group 2023 Annual Report # RISKS CONTINUED | | Risk description and impact | Approach to mitigating risk | | --- | --- | --- | | **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. | 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'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. | | **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. The planning status of all sites is also reviewed at both monthly divisional Board meetings and Main Board meetings. The Group works closely with local communities in respect of planning proposals and maintains strong relationships 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. | Two commitments within Our Vision 2030 are designed 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'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. | 92 Berkeley Group 2023 Annual Report Key to strategy | 7 Customers | 2 Quality | 4 Communities | 3 Climate Action | 5 Nature | | --- | --- | --- | --- | --- | | 6 Employee Experience | 4 Modernised Production | 1 Future Skills | 3 Supply Chain | 4 Shared Value | Key to risk | ↑ 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 | | --- | --- | --- | --- | --- | | 2 3 4 5 | Low | — | — | The Group continues to focus on protecting and enhancing the value of the land holdings 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. No new sites have been added to the land holdings in 2022/23, reflecting the continuing volatility in the operating environment. Read more on pages 20 to 27. | | 4 5 | High | — | — | The planning process remains highly complex and time consuming with ongoing demands from a combination of affordable housing, the Community Infrastructure Levy, Section 106 obligations, Gateway 2 tall building levy and review mechanisms. These all impact the cost of development as well the time taken to move through the planning process. In December 2022, changes were proposed to the NPPF, and we are concerned that these will materially reduce the pace of delivery of new homes. Read more on pages 20 to 27. | | 7 6 7 | Medium | — | — | The motivation, retention and progression of our people remains fundamental to the delivery of our strategy. The Group continues to have a stable senior management team and despite the normal pressure of people retention, overall retention rates remained relatively stable during the course of the year as a result of the ongoing focus on talent management, career progression opportunities, training, benefits, health and wellbeing initiatives and flexibility on working hours. Read more on pages 27, 50, 80 to 83. | | 2 3 4 5 | Medium | ↑ | ↑ | Reservations for the year were around 15% lower than the prior year, with sentiment and customer confidence impacted by the sharp increase in interest rates since September 2022. Our forward sales position remains strong with cash due on forward sales totalling £2.1 billion at 30 April 2023. Until there is greater visibility on the timing of the anticipated reduction in interest rates and consumer confidence returns, we will continue to be cautious on new investment and sales launches, instead focusing on selling homes at our existing developments where there is established demand. Pricing has remained robust, reflecting the under-supply in the market. Customers remain at the heart of all of our decisions, and Berkeley prioritises customer service, communities, nature and overall quality of place through its Our Vision 2030 targets. We are committed to understanding their needs and consistently meeting or exceeding their expectations. Read more on pages 26, 40 and 80. | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 93 ## RISKS CONTINUED Impact | | | | Residual | | | | change | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Link to | | risk | Likelihood | | during | | Commentary and developments | | Risk description and impact Approach to mitigating risk | | strategy: | rating: | | | change: | | year: | if any during the year | | Reduced availability of the | The Board approves treasury policy and senior management | | | Low | | | | | The Group had net cash of £410 million at 30 April 2023, giving the Group | ### Liquidity externalfinancing required by control day-to-day operations. Relationships with banks c.£1.6 billion of liquidity when combined with bank facilities. theGroup to pursue its activities and cash management are co-ordinated centrally as a In February 2023, we exercised the first of two one year extensions to the andmeet its liabilities. Group function. £800 million bank facility at unchanged pricing. Failure to manage working capital The treasury policy is intended to maintain an appropriate Berkeley has a strong working partnership with the six banks that provide mayconstrain the growth of the capital structure to manage the Group’s financial risks and thefacilities which is key to Berkeley’s approach to mitigating liquidity risk. business and ability to execute provide the right platform for the business to manage its thebusiness plan. operating risks. Read more on page 81. Cash flow management is central to the continued success of Berkeley. 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. An inability of customers to secure Berkeley has a broad product mix and customer base Medium Banks remain very supportive of housebuilders and home buyers, but the ### Mortgages sufficient mortgage finance now or in which reduces the reliance on mortgage availability continued increase in interest rates is creating uncertainty in the mortgage the future could have a direct impact acrossits portfolio. market over how high interest rates may go. on the Group’s transaction levels. Deposits are taken on all sales to mitigate the financial Current rates are generally between 5% and 6%, and customer confidence impact on the Group in the event that sales do not inthe economic outlook will determine the extent to which they transact complete due to a lack of mortgage availability. atthese levels. The effects of climate change could Climate action is a strategic priority within our business Medium This year we have reviewed our strategy and supporting arrangements ### Climate impact Berkeley in different ways. strategy, Our Vision 2030, and we have set ambitious againstthe findings of the detailed scenario analysis undertaken last year. ### change Climate Scenario Analysis has been science-based targets (SBTs) to mitigate our impact, Thisprocess identified that the strategy is appropriate based on the risks undertaken to evaluate climate alongside continuing to incorporate adaptation measures andopportunities identified. relatedrisks and opportunities. within our developments to make them more resilient to Our project teams continue to focus on energy and carbon efficiency and we the expected future impacts of climate change. | Identified risks and opportunities | | are pleased to have achieved our scopes 1 and 2 SBT this year; seven years | | --- | --- | --- | | relating to the transition to a lower | We have energy efficiency standards in place that cover | earlier than our 2030 target. | | carbon economy include: carbon | the activities of our sites, offices and sales suites and | | Building upon the initial embodied carbon studies completed in 2021/22, pricing and emissions offsets; encourage the identification and investment in measures adivisional requirement was introduced in summer 2022 to undertake an evolvingplanning and design to take action under our scopes 1 and 2 greenhouse gas embodied carbon assessment on sites with completions from 2025/26 requirements; skills shortage (GHG) emissions reduction target. In addition, our scope 3 andour teams have been upskilled on key impact areas. impacting ability to install low SBT commits us to working with our supply chain to carbontechnology; technology reduce the embodied carbon within the materials and The 2021 Building Regulations became effective in June 2022. Berkeley evolution; increasing raw material services we procure, and building more efficient homes. isnowdesigning to the new regulations for implementation on sites from cost;and demand supply imbalance. June2023 (the Government set a one-year transition period) and preparing To build resilience into our homes and developments, we for the more stringent Future Homes Standard. Risks relating to the physical impacts consider climate change risks and incorporate measures of climate change include: heat stress, toreduce these through minimum Sustainability Standards. Our 2022 response to the CDP Climate Change questionnaire achieved drought stress, subsidence, windstorm These cover areas such as energy efficiency, water efficiency, aLeadership rating of ‘A-‘. and flood. rainwater harvesting, sustainable drainage systems (SuDS) Read more about key actions in the year on pages 62 to 77. and leaving space for nature. Read more about our Climate ScenarioAnalysis on pages 68 to 73. Read more about our mitigation actions for key risks identified through Climate Scenario Analysis on pages 68 to 73. 94 Berkeley Group 2023 Annual Report Key to strategy Key to risk Customers Quality Communities Climate Action Nature Increase risk No change Strategic Report Corporate Governance Financial Statements Employee Modernised Future Supply Shared Decrease risk Experience Production Skills Chain Value Impact | | | | Residual | | | | change | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Link to | | risk | Likelihood | | during | | Commentary and developments | | Risk description and impact Approach to mitigating risk | | strategy: | rating: | | | change: | | year: | if any during the year | | Reduced availability of the | The Board approves treasury policy and senior management | | | Low | | | | | The Group had net cash of £410 million at 30 April 2023, giving the Group | ### Liquidity externalfinancing required by control day-to-day operations. Relationships with banks c.£1.6 billion of liquidity when combined with bank facilities. theGroup to pursue its activities and cash management are co-ordinated centrally as a In February 2023, we exercised the first of two one year extensions to the andmeet its liabilities. Group function. £800 million bank facility at unchanged pricing. Failure to manage working capital The treasury policy is intended to maintain an appropriate Berkeley has a strong working partnership with the six banks that provide mayconstrain the growth of the capital structure to manage the Group’s financial risks and thefacilities which is key to Berkeley’s approach to mitigating liquidity risk. business and ability to execute provide the right platform for the business to manage its thebusiness plan. operating risks. Read more on page 81. Cash flow management is central to the continued success of Berkeley. 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. An inability of customers to secure Berkeley has a broad product mix and customer base Medium Banks remain very supportive of housebuilders and home buyers, but the ### Mortgages sufficient mortgage finance now or in which reduces the reliance on mortgage availability continued increase in interest rates is creating uncertainty in the mortgage the future could have a direct impact acrossits portfolio. market over how high interest rates may go. on the Group’s transaction levels. Deposits are taken on all sales to mitigate the financial Current rates are generally between 5% and 6%, and customer confidence impact on the Group in the event that sales do not inthe economic outlook will determine the extent to which they transact complete due to a lack of mortgage availability. atthese levels. The effects of climate change could Climate action is a strategic priority within our business Medium This year we have reviewed our strategy and supporting arrangements ### Climate impact Berkeley in different ways. strategy, Our Vision 2030, and we have set ambitious againstthe findings of the detailed scenario analysis undertaken last year. ### change Climate Scenario Analysis has been science-based targets (SBTs) to mitigate our impact, Thisprocess identified that the strategy is appropriate based on the risks undertaken to evaluate climate alongside continuing to incorporate adaptation measures andopportunities identified. relatedrisks and opportunities. within our developments to make them more resilient to Our project teams continue to focus on energy and carbon efficiency and we the expected future impacts of climate change. | Identified risks and opportunities | | are pleased to have achieved our scopes 1 and 2 SBT this year; seven years | | --- | --- | --- | | relating to the transition to a lower | We have energy efficiency standards in place that cover | earlier than our 2030 target. | | carbon economy include: carbon | the activities of our sites, offices and sales suites and | | Building upon the initial embodied carbon studies completed in 2021/22, pricing and emissions offsets; encourage the identification and investment in measures adivisional requirement was introduced in summer 2022 to undertake an evolvingplanning and design to take action under our scopes 1 and 2 greenhouse gas embodied carbon assessment on sites with completions from 2025/26 requirements; skills shortage (GHG) emissions reduction target. In addition, our scope 3 andour teams have been upskilled on key impact areas. impacting ability to install low SBT commits us to working with our supply chain to carbontechnology; technology reduce the embodied carbon within the materials and The 2021 Building Regulations became effective in June 2022. Berkeley evolution; increasing raw material services we procure, and building more efficient homes. isnowdesigning to the new regulations for implementation on sites from cost;and demand supply imbalance. June2023 (the Government set a one-year transition period) and preparing To build resilience into our homes and developments, we for the more stringent Future Homes Standard. Risks relating to the physical impacts consider climate change risks and incorporate measures of climate change include: heat stress, toreduce these through minimum Sustainability Standards. Our 2022 response to the CDP Climate Change questionnaire achieved drought stress, subsidence, windstorm These cover areas such as energy efficiency, water efficiency, aLeadership rating of ‘A-‘. and flood. rainwater harvesting, sustainable drainage systems (SuDS) Read more about key actions in the year on pages 62 to 77. and leaving space for nature. Read more about our Climate ScenarioAnalysis on pages 68 to 73. Read more about our mitigation actions for key risks identified through Climate Scenario Analysis on pages 68 to 73. 95Berkeley Group 2023 Annual Report # RISKS CONTINUED | | Risk description and impact | Approach to mitigating risk | | --- | --- | --- | | **Sustainability** | Berkeley is aware of the environmental and social impact of the homes and places that it builds, both throughout the development process and during occupation and use by customers and the wider community. Failure to address sustainability issues could affect the Group's ability to acquire land, gain planning permission, manage sites effectively and respond to increasing customer demands for sustainable homes and communities, with access to green spaces and nature. | The strategic direction for sustainability is set at a Group level within a dedicated Sustainability Strategy. Three areas of the Sustainability Strategy have been identified as being of material importance and integrated within our business strategy, Our Vision 2030: communities, climate action and nature. We have specific commitments to enhance environmental and social value in the operation of our business and the delivery of our homes and places. Dedicated sustainability teams are in place at Group's Head Office and within each division of the business, providing advice, driving improvement and monitoring performance. Sustainability Standards set out the minimum Berkeley requirements for new developments and the operation of our construction sites, divisional offices and sales suites. These are supported by more detailed procedures within our Sustainability Management System, including a requirement for environmental risk registers for each site and the completion of at least quarterly site sustainability assessments by our internal sustainability professionals. | | **Health and safety** | Berkeley's operations have a direct impact on the health and safety of its people, contractors and members of the public. 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. | 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. 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. | | **Product quality and customers** | Berkeley has a reputation for high standards of quality in its product. If the Group fails to deliver against these standards and its wider development obligations, it could be exposed to reputational damage, as well as reduced sales and increased cost. | Detailed reviews are undertaken of the product on each scheme both during the acquisition of the site and throughout the build process to ensure that product quality is maintained. The Group has detailed quality assurance procedures in place surrounding both design and build to ensure the adequacy of build at each key stage of construction. Customer satisfaction surveys are undertaken on the handover of our homes, and feedback incorporated into the specification and design of subsequent schemes. | 96 Berkeley Group 2023 Annual Report Key to strategy | 7 Customers | 2 Quality | 4 Communities | 3 Climate Action | 5 Nature | | --- | --- | --- | --- | --- | | 6 Employee Experience | 4 Modernised Production | 1 Future Skills | 1 Supply Chain | 4 Shared Value | Key to risk | ↑ 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 | | --- | --- | --- | --- | --- | | 1 2 3 4 5 | Medium | — | — | The Group continues to focus on commitments and initiatives that enable the long-term success of our business and developments, and that differentiate Berkeley. We continue to embed our Sustainability Strategy internally, supporting our strategic plan for the business, Our Vision 2030. In March 2023, Berkeley (in conjunction with Natural England and Local Government Association) held a Biodiversity Net Gain conference, bringing together leaders and experts from across the public, private and voluntary sectors to share knowledge, experience and solutions. The conference was attended by over 500 delegates and aimed to help local government and development professionals deepen their understanding of biodiversity net gain and learn from current and completed projects. Within the year the Sustainability Standards were reviewed and updated to reflect recent changes in Building Regulations and to align to evolving requirements for project teams resulting from actions taken to date under our five areas of focus for sustainability. Read more on pages 44, 48 to 49, and 62 to 77. | | 6 7 | Medium | — | — | High levels of production continue across the Group, with site based headcount stable at around 10,000. Health and safety remains an operational priority for Berkeley and our AIIR at the year end was 79, well below our target of 250 and remains one of the best in the industry. Read more on pages 50 and 80. | | 7 8 9 10 | Medium | — | — | The Group's continued focus on improving the quality of design and product, with attention to every detail in our homes, remains at the heart 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. Read more on pages 40 to 41 and 80. | Strategic Report Corporate Governance Financial Statements Berkeley Group, 2023 Annual Report 97 ## RISKS CONTINUED Impact Residual change Link to risk Likelihood during Commentary and developments Risk description and impact Approach to mitigating risk strategy: rating: change: year: if any during the year Build costs are affected by the A procurement and programming strategy for each Medium We are seeing a stabilisation of material costs through a reduction in both the ### Build cost and availability of skilled labour and the development is agreed by the divisional Board before site pace and level of price increases, and we are starting to see some reductions ### programme price and availability of materials, acquisition, whilst a further assessment of procurement and being applied. suppliers and contractors. programming is undertaken and agreed by the divisional There is good availability for the vast majority of building products and our Board prior to the commencement of construction. Declines in the availability of a skilled sub-contractor base continues to report sufficient availability of labour workforce, and changes to these Build cost reconciliations and build programme dates are resource of the right quality. prices could impact on our build presented and reviewed in detail at divisional cost review The broader risk from energy prices remains and it is too soon to conclude programmes and the profitability meetings each month. that there will be no further volatility in build costs. ofour schemes. Our Vision 2030 strategy includes ongoing commitments We expect to see continued moderation in build cost inflation over the course to training and support across both our employees and our of the 2023 to more normal levels. indirect workforce. Read more on pages 53 and 82. The Group acknowledges that it places Berkeley’s systems and control procedures are designed High The threat from cyber-attacks remains high and the methods of attack continue ### Cyber and significant reliance upon the availability, toensure that confidentiality, availability and integrity to evolve and are becoming more sophisticated, requiring additional technical ### data risk accuracy and confidentiality of all of arenot compromised. controls and awareness training. itsinformation systems and the data Our Information Security Programme focuses primarily Email based attacks remain a significant risk. An industry leading email contained therein. onthe detection and prevention of security incidents security platform is in place and is constantly reviewed and improved to The Group could suffer significant andpotential data breaches. address new threats. financial and reputational damage An IT Security Committee meets monthly to address all The Cyber Security team regularly send awareness reminders when threats because of the corruption, loss or theft cyber security matters. affecting the Group are detected. of data, whether inadvertent orvia a deliberate, targeted cyber-attack. The Group operates multiple physical data centres Read more on page 116. 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 anypotential financial impact. 98 Berkeley Group 2023 Annual Report Key to strategy Key to risk Customers Quality Communities Climate Action Nature Increase risk No change Strategic Report Corporate Governance Financial Statements Employee Modernised Future Supply Shared Decrease risk Experience Production Skills Chain Value Impact Residual change Link to risk Likelihood during Commentary and developments Risk description and impact Approach to mitigating risk strategy: rating: change: year: if any during the year Build costs are affected by the A procurement and programming strategy for each Medium We are seeing a stabilisation of material costs through a reduction in both the ### Build cost and availability of skilled labour and the development is agreed by the divisional Board before site pace and level of price increases, and we are starting to see some reductions ### programme price and availability of materials, acquisition, whilst a further assessment of procurement and being applied. suppliers and contractors. programming is undertaken and agreed by the divisional There is good availability for the vast majority of building products and our Board prior to the commencement of construction. Declines in the availability of a skilled sub-contractor base continues to report sufficient availability of labour workforce, and changes to these Build cost reconciliations and build programme dates are resource of the right quality. prices could impact on our build presented and reviewed in detail at divisional cost review The broader risk from energy prices remains and it is too soon to conclude programmes and the profitability meetings each month. that there will be no further volatility in build costs. ofour schemes. Our Vision 2030 strategy includes ongoing commitments We expect to see continued moderation in build cost inflation over the course to training and support across both our employees and our of the 2023 to more normal levels. indirect workforce. Read more on pages 53 and 82. The Group acknowledges that it places Berkeley’s systems and control procedures are designed High The threat from cyber-attacks remains high and the methods of attack continue ### Cyber and significant reliance upon the availability, toensure that confidentiality, availability and integrity to evolve and are becoming more sophisticated, requiring additional technical ### data risk accuracy and confidentiality of all of arenot compromised. controls and awareness training. itsinformation systems and the data Our Information Security Programme focuses primarily Email based attacks remain a significant risk. An industry leading email contained therein. onthe detection and prevention of security incidents security platform is in place and is constantly reviewed and improved to The Group could suffer significant andpotential data breaches. address new threats. financial and reputational damage An IT Security Committee meets monthly to address all The Cyber Security team regularly send awareness reminders when threats because of the corruption, loss or theft cyber security matters. affecting the Group are detected. of data, whether inadvertent orvia a deliberate, targeted cyber-attack. The Group operates multiple physical data centres Read more on page 116. 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 anypotential financial impact. 99Berkeley Group 2023 Annual Report ## BROWNFIELD REGENERATION IN ACTION ## CLARENDON ## HARINGEY Above: The former gasworks site during regeneration Right: After regeneration, Clarendon today 100 Berkeley Group 2023 Annual Report Strategic Report Corporate Governance Financial Statements 101Berkeley Group 2023 Annual Report # GOVERNANCE AT A GLANCE ## 2018 UK CORPORATE GOVERNANCE CODE (THE 'CODE') The Code is the corporate governance code to which we referred during the financial year to 30 April 2023, and can be found at www.frc.org.uk. Throughout the year, and in accordance with Listing Rule 9.8.6R, the Board considers that it has applied the Principles and complied with the Provisions of the Code, save where an explanation has been provided in respect of Provision 38 as outlined on page 138 of the Directors' Remuneration Report. The Company subsequently aligned pension contributions with the wider workforce from 31 December 2022 in line with the Investment Association Principles of Remuneration. As permitted by Provisions 10 and 19 of the Code, explanations for the approach adopted by the Company in respect of those Provisions are set out on page 117 of this Report. The Board has reviewed the Annual Report and Accounts and considers that, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy. Further details on how we comply with the Code are outlined in this Governance Report. ![img-2.jpeg](img-2.jpeg) ## LEADERSHIP AND PURPOSE PAGES 110-118 Our Board is responsible for leading the business in the way which we believe is most likely to promote its long-term sustainable success, generating value for shareholders and contributing to wider society. This includes effective engagement with all our stakeholders and particularly our colleagues. ### Highlights of the year - Chairman succession - Review of Board and Committees' composition - Introduction of topic-specific deep-dives on strategy, risk, people, external positioning and other matters - Consideration of matters relevant to signing developer self-remediation terms and contract ### Corporate Governance Contents | Chairman's Introduction to the Corporate Governance Report | 104 | | --- | --- | | Board of Directors | 106 | | Board Leadership and Company Purpose | 110 | | Our Culture | 112 | | Stakeholder Engagement | 114 | | Division of Responsibilities | 119 | | Nomination Committee Report | 122 | | Audit Committee Report | 128 | | Directors' Remuneration Report | 132 | | Directors' Report | 157 | 102 Berkeley Group 2023 Annual Report Our Board ensures we have Highlights of the year ## DIVISION OF theappropriate combination of — Chairman succession ## RESPONSIBILITIES | | Executive and Non-executive | — Changes to composition | | --- | --- | --- | | PAGES 119 TO 121 | Directors without any one | ofkeyCommittees | | | individual or group of individuals | — Further review of Board | | | dominating the decision making. | and Committees’ composition | Corporate GovernanceStrategic Report Our Nomination Committee Highlights of the year ## COMPOSITION, ensures that we have: a balanced — Chairman succession ## SUCCESSION AND Board and Committees with the — Board evaluation ## EVALUATION appropriate skills, experience and — Changes to composition knowledge to govern the business; ofkeyCommittees ## PAGES 122 TO 127 annual evaluations; and an effective — Future Board and succession plan. Committees’composition Financial Statements andsuccession planning Our Audit Committee monitors the Highlights of the year ## AUDIT, RISK independence and effectiveness — Competitive audit firm ## AND INTERNAL ofinternal and external audit tenderprocess ## CONTROL functions, the integrity of the — Review of risk management Financial Statements and oversees processes and internal ## PAGES 128 TO 131 the risk management process and controlsframework internal control environment. Our Remuneration Committee Highlights of the year ## REMUNERATION determines the Remuneration — Alignment of remuneration ## PAGES 132 TO 156 Policy and practices which aim andstrategy toincentivise strong performance — New Remuneration Policy while supporting the Group’s — Shareholder and proxy advisory strategy and promoting its agency consultations long-term sustainable success, — Extension of Long-Term Option avoiding excessive risk taking. The Plan to key employees Committee oversees the Policy implementation, having regard forpay across the business. 103Berkeley Group 2023 Annual Report # CHAIRMAN'S INTRODUCTION ![img-3.jpeg](img-3.jpeg) Michael Dobson, Chairman **I am pleased to introduce the Corporate Governance Report for the 2022/23 financial year, my first since I joined Berkeley in June 2022. The Board has continued to embrace high standards of corporate governance in accordance with the Code. This report outlines Berkeley's governance arrangements throughout the year and describes how the Board and its Committees have operated and discharged their responsibilities in considering and applying the Principles and Provisions of the Code.** Berkeley is a business with a distinctively long-term operating model and value-added approach with a commitment to generating sustainable returns for its shareholders across the business cycle. Berkeley has a strong purpose, to build quality homes, strengthen communities and improve people's lives, a clear set of values and a unique culture. A strong governance framework is of fundamental importance in supporting Berkeley's long-term success and ensuring an effective Board. Over the past year, the principle focus of the Board has been on the Group's strategy, unique operating model, business resilience, risks and opportunities. This focus has been instrumental in more fully integrating newer members of the Board and developing their appreciation of the Berkeley strategy, purpose, values and culture. A key focus of 2023/2024 will be further ensuring Non-executive Directors' depth of understanding of the Company's strategy and the related risk environment. This has been a significant year for the Committees of the Board. During the year, the Remuneration Committee developed a new Remuneration Policy, which was put to a shareholder vote at the 2022 Annual General Meeting of the Company (the '2022 AGM"). The Chairman of the Remuneration Committee consulted extensively with the Company's largest shareholders and proxy advisors, both ahead of the finalisation of the Group's 2022 Remuneration Policy and also following its approval at the 2022 AGM. Recognising that the Group's external auditor, KPMG, had been in post for nine years, the Audit Committee conducted a competitive tender process for the appointment of the next external auditor for the Company and its subsidiaries. Following this process, on the recommendation of the Audit Committee, the Board has re-appointed KPMG as auditor and a resolution proposing their re-appointment will be put to the 2023 Annual General Meeting of the Company (the '2023 AGM"). During the year, the Nomination Committee and the Board as a whole have given particular attention to succession planning and the composition of the Board and its Committees. The Board has undergone a period of significant transition over the last three years and we now have a diverse Board with a wide range of experience and knowledge. My thanks go to Glyn Barker for his significant contribution in beginning the transition of the Board and for his considerable service over the previous nine years. Recognising, however, that three of the Non-executive Directors on the Board have now passed nine years' service, the Board has agreed that Sir John Armitt, Diana Brightmore-Armour and Andy Myers will step down from the Board and retire as Non-executive Directors at the conclusion of the 2023 AGM. I would like to thank Sir John, Diana and Andy for their outstanding service to the Berkeley Board and its Committees over their tenure as Non-executive Directors. Berkeley and the Board have benefited greatly from their individual expertise and judgment and they leave with our best wishes. The Company has decided to take this opportunity to streamline the Board by reducing its size and so will not be replacing the departing Non-executive Directors. Additionally, three Executive Directors, Justin Tibaldi, Paul Vallone and Karl Whiteman, will also step down from the Board at the end of the 2023 AGM. I would like to pay tribute to Justin, Paul and Karl for their significant contributions to the Board. They will remain in their current operational roles and members of the Board of the Company's immediate subsidiary, The Berkeley Group plc, with Rob Perrins and Richard Stearn, the Group's CEO and CFO, and their importance to Berkeley, internally and externally, will not change. Following these changes the Board will comprise nine Directors, an independent Non-executive Chairman, two Executive Directors and six Non-executive Directors. The Board size will therefore be reduced from fifteen to nine. There will also be a number of changes to key Board and Committee roles. 104 Berkeley Group 2023 Annual Report ### Board attendance Member Meetings % of meetings attended attended 1 Michael Dobson Non-executive Chairman 100% 2 | Glyn Barker | Non-executive Chairman 100% | | | --- | --- | --- | | Diana Brightmore-Armour Senior Independent Director | | 100% | | Andy Myers Non-executive Director | | 100% | | Andy Kemp Non-executive Director | | 100% | | Rob Perrins Executive Director | | 100% | Corporate GovernanceStrategic Report | Richard Stearn Executive Director | 100% | | --- | --- | | Karl Whiteman Executive Director | 100% | | Justin Tibaldi Executive Director | 100% | | Paul Vallone Executive Director | 100% | 3 Sir John Armitt, CBE Non-executive Director 100% 4 | Rachel Downey | Non-executive Director 100% | | | --- | --- | --- | | The Ven. Elizabeth Adekunle Non-executive Director | | 100% | | William Jackson Non-executive Director | | 100% | Financial Statements 5 Sarah Sands Non-executive Director 100% 6 Natasha Adams Non-executive Director 100% 1 Appointed as Non-executive Director and member of the Nomination Committee on 8 June 2022 and as Chairman of the Board, Chairman of the Nomination Committee and member of the Remuneration Committee on 6 September 2022 2 Stood down as Chairman of the Board, Non-executive Director, Chairman and member of the Nomination Committee and member oftheRemuneration Committee on 6 September 2022 3 Stood down as member of the Nomination Committee on 16 November 2022 4 Appointed as member of the Nomination Committee on 16 November 2022 5 Appointed as member of the Audit Committee on 16 November 2022 6 Appointed as member of the Remuneration Committee on 6 September 2022 Further details are set out on page ### Former Director who served during the year 123of this report. As at 30 April 2023, | 33% of the Board are women, which | Glyn Barker | | | --- | --- | --- | | will increase to 40% after the 2023 | | — Independent Non-executive Director from 3 January 2012 to | | AGM. The Board is otherwise already | | 6 September2022 | compliant with all diversity requirements. — Chairman of the Board and Nomination Committee from 23 July 2020 to Since joining the Board of Berkeley, 6 September 2022 (having been a member of the Nomination Committee Ihave greatly enjoyed visiting key sites since 18 April 2018) and business divisions and meeting — Interim Chairman from 26 June 2020 to 23 July 2020 and Deputy employees, shareholders and other Chairman from 18 April 2018 to 26 June 2020 stakeholders. I would like to thank all my colleagues on the Board for their — Senior Independent Director from 18 April 2018 to 23 July 2020 contribution during the year and I look — Member of the Remuneration Committee from 13 June 2012 to 6 September forward to continuing to work with 2022 (having previously been Chairman of the Remuneration Committee Berkeley’s people and the Board to from 14 June 2013 to 23 July 2020) continue to deliver long-term value forshareholders. — Member of the Audit Committee from 5 September 2012 to 23 July 2020 Michael Dobson Chairman 21 June 2023 105Berkeley Group 2023 Annual Report # BOARD OF DIRECTORS | | **Michael Dobson** Chairman of the Board and of the Nomination Committee **Appointed** 8 June 2022 as non-executive Director and 6 September 2022 as Chairman **Tenure** 1 year | **Skills, experience and contribution** Michael was appointed to the Board on 8 June 2022 as an independent Non-executive Director and member of the Nomination Committee and, on 6 September 2022, became Chairman of the Board and the Nomination Committee and a member of the Remuneration Committee. Michael brings extensive leadership, corporate and financial experience to the Board. He stepped down as Chairman of Schroders plc in April 2022 after six years, following an executive career in the City spanning over 40 years. Michael was Chief Executive of Schroders plc from 2001 to 2016 and previously held a number of leadership positions at Deutsche Bank AG, including Head of Global Asset Management, Head of Global Investment Banking and a Member of the Board of Managing Directors. Prior to this he was Chief Executive of Morgan Grenfell Group PLC and Deutsche Morgan Grenfell. **Other appointments** N/A | | --- | --- | --- | | | **Diana Brightmore-Armour FCCA, FCT** Senior Independent Director **Appointed** 1 May 2014 **Tenure** 9 years | **Skills, experience and contribution** Diana is 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. Diana was also CEO of Corporate Banking at Lloyds Banking Group (2004-2012) and spent her early career at The Coca-Cola Company. She has over 30 years' international experience in banking, corporate finance, financial management, treasury and audit. Diana is a Fellow of the Association of Chartered Certified Accountants and a Fellow of the Association of Corporate Treasurers. 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. Diana will be stepping down as Senior Independent Director and a Non-executive Director and member of the Nomination Committee at the conclusion of the Company's Annual General Meeting on Friday 8 September 2023 (the '2023 AGM'). **Other appointments** CEO, C. Hoare & Co. | | | **Rob Perrins BSc (Hons) FCA** Chief Executive **Appointed** 1 May 2001 **Tenure** 22 years | **Skills, experience and contribution** Rob joined Berkeley in 1994. He has been a Main Board member since 2001 and Chief Executive since 2009, having previously been CFO from 2002. Under his management, Berkeley has increasingly focused on transforming large-scale brownfield sites, which are beyond the scope of conventional homebuilders. Rob has worked extensively in property development throughout his career, working on projects ranging from single houses to mixed-use neighbourhoods with more than 10,000 homes. Rob champions Berkeley's operating culture and values, which are based on customer focus, individual design, exceptional placemaking and a commitment to delivery for all stakeholders. He oversees a highly disciplined but decentralised operating structure that fosters accountability and innovation, chairing the boards of Berkeley's 21 autonomous operating companies. Rob additionally oversees an industry leading sustainability strategy, including innovative climate action, nature recovery and social value programmes. Rob has been Chair of Trustees of the Berkeley Foundation since its launch in 2011. This independent charity works in close partnership with the Berkeley Group to maximise its positive social impacts. **Other appointments** Chair of Trustees, Berkeley Foundation (since 2011) Governor, Marlborough College (since 2021) | | | **Richard Stearn BSc (Hons) FCA** Chief Financial Officer **Appointed** 12 April 2015 **Tenure** 8 years | **Skills, experience and contribution** Richard re-joined Berkeley on 15 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 Quintan Estates and Development plc, serving as the company's Finance Director for most of that time. Richard is responsible for the Group's finance, investor relations, treasury, tax and insurance functions. He also leads on strategic risk management and has oversight of the Group's IT function. Richard has 21 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 PwC, auditing and advising a wide range of clients. **Other appointments** None | 106 Berkeley Group 2023 Annual Report # Key to Committees - Audit Committee - Nomination Committee - Remuneration Committee - Committee Chairman ![img-4.jpeg](img-4.jpeg) Andy Myers BEng (Hans) ACA Independent Non-executive Director Chairman of the Audit Committee A+ Appointed 13 April 2015 Tenure 9 years # 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/Royer 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. Andy will be stepping down as a Non-executive Director, Chair and member of the Audit Committee and member of the Remuneration Committee at the conclusion of the 2023 AGM. # Other appointments Chief Financial Officer and member of the Management Board, SUSE S. A. ![img-5.jpeg](img-5.jpeg) Andy Kemp BA (Econ) FCA Independent Non-executive Director Chairman of the Remuneration Committee A+ Appointed 1 July 2021 Tenure 1 year # Skills, experience and contribution Appointed as a Non-executive Director on 1 July 2021, following his retirement from PricewaterhouseCoopers LLP after a 39 year career with the firm. Andy is a Chartered Accountant and was a senior partner at PwC in London, advising the boards of some of the UK's largest multinational companies. Andy brings extensive knowledge of accounting, risk and governance matters having been an audit partner for 27 years and through his chairmanship of the PwC Non-executive Director Programme. Andy was previously a member of PwC's Audit and Risk Assurance Executive Board. On 1 February 2023, Andy was appointed as a Non-executive Director of ScS Group plc, as announced on 20 June 2022. The Board considered the proposed appointment, in accordance with Provision 15 of the Code, and were satisfied that the time required does not impact on Andy's availability for his role at Berkeley. At the conclusion of the 2023 AGM, Andy will become Chairman of the Audit Committee and a member of the Nomination Committee and will step down as Chairman, and will remain as a member of the Remuneration Committee. # Other appointments Non-executive Director, SCS Group plc Non-executive Director and Chair of the Audit Committee, Irwin Mitchell Holdings Limited Member of the Board of the Audit Committee Chairs' Independent Forum Governor and Member of the Audit Committee, Birkbeck University of London ![img-6.jpeg](img-6.jpeg) Sir John Armitt CBE FREng FICE FIC&G Independent Non-executive Director Appointed 1 October 2007 Sir John served as Deputy Chairman and Senior Independent Director from 5 September 2012 to 18 April 2018 Tenure 15 years # Skills, experience and contribution Sir John is currently Chairman of the National Infrastructure Commission. Sir John was previously Chairman of National Express Group PLC (2013-2022), the City & Guilds Group (2012-2021) and the Olympic Delivery Authority (2007 – 2014). He was previously President of the Institution of Civil Engineers (2015 – 2016) 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 division. 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. Sir John will be stepping down as a Non-executive Director at the conclusion of the 2023 AGM. # Other appointments Chairman, National Infrastructure Commission ![img-7.jpeg](img-7.jpeg) Rachel Downey ACA Independent Non-executive Director A+ Appointed 9 December 2017 Tenure 5 years # Skills, experience and contribution Rachel brings extensive regeneration expertise to the Board. She is Project Director of Manchester Life, a joint venture between Acre Real Estate Investment & Development LLC and Manchester City Council, established in 2014 to make a significant contribution towards achieving Manchester's regeneration and residential growth ambitions. Manchester Life has delivered 1,500 homes and 500 more are planned for its third phase. Rachel, a Chartered Accountant, is also currently a 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). Rachel will be appointed Senior Independent Director at the conclusion of the 2023 AGM. # Other appointments Project Director, Manchester Life Non-executive Director, Lancashire County Cricket Club Trustee of We Love Manchester Emergency Fund Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 107 BOARD OF DIRECTORS CONTINUED | **William Jackson** Independent Non-executive Director **Appointed** 5 January 2021 **Tenure** 2 years | **Skills, experience and contribution** William is Executive Chairman of Bridgepoint Group plc, 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 also Senior Independent Director and Non-executive Director of The Royal Marsden NHS Foundation Trust. William brings extensive property, commercial, financial and PLC experience to the Board. William will become a member of the Remuneration Committee at the conclusion of the 2023 AGM. **Other appointments** Executive Chairman, Bridgepoint Group plc Non-executive Director, The Royal Marsden NHS Foundation Trust | | --- | --- | | **The Ven. Elizabeth Adekunle** Independent Non-executive Director **Appointed** 5 January 2021 **Tenure** 2 years | **Skills, experience and contribution** Liz is currently a Non-executive Director of The Royal Marsden NHS Foundation Trust and a Chaplain to His Majesty the King. She was previously Chaplain to Her Majesty Queen Elizabeth II (since April 2017) and Archdeacon of Hackney in the Diocese of London. 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 Chiefs' Ethics Committee and also a Board Member of Hive Education Trust. Liz was previously Chair of the Monuments and Plaques Committee at St Paul's Cathedral. 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** Non-executive Director, The Royal Marsden NHS Foundation Trust Chaplain to His Majesty the King Board member, STRIDE, Metropolitan Police Board Member, National Police Chiefs' Ethics Committee Board Member, Hive Education Trust | | **Sarah Sands** Independent Non-executive Director **Appointed** 30 April 2021 **Tenure** 2 years | **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 currently Deputy Chair and Acting Chair of the British Council, a Non-executive Director of Channel 4, a Partner at Hawthorn Advisors and a Member of the Board of Trustees of The Science Museum Group. Sarah is a founder of the Braemar Science Summit and was Chair of the Gender Equality Advisory Council for G7 for 2021 and has continued to sit on the Advisory Council in 2022 under the Germany Presidency and in 2023 under the Japan Presidency. 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** Deputy Chair and Acting Chair, British Council Non-executive Director, Channel Four Television Corporation Partner, Hawthorn Advisors Trustee of the Board, The Science Museum Group | | **Natasha Adams** Independent Non-executive Director **Appointed** 17 January 2022 **Tenure** 1 year | **Skills, experience and contribution** Natasha is Chief Executive Officer of Tesco Ireland since 7 March 2022 and is a member of the Tesco PLC Executive Committee. Immediately prior to her current role, Natasha was Group Chief People Officer of Tesco PLC. Natasha has experience as a Trustee of the Tesco Pension Scheme and is a Trustee of the Institute of Grocery & Distribution. Natasha brings to the Board valuable insight on commercial and social governance matters. At the conclusion of the 2023 AGM, Natasha will be appointed Chair of the Remuneration Committee and a member of the Nomination Committee. **Other appointments** Chief Executive Officer, Tesco Ireland Executive Committee member, Tesco PLC Trustee, Institute of Grocery & Distribution | 108 Berkeley Group 2023 Annual Report Key to Committees Audit Committee Nomination Committee Remuneration Committee Committee Chairman ![img-8.jpeg](img-8.jpeg) Justin Tibaldi Executive Director Appointed 8 December 2017 Tenure 5 years 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. Justin will step down as an Executive Director of the Board at the conclusion of the 2023 AGM, but will remain in his current operational role and as a member of the Board of the Company's immediate subsidiary, The Berkeley Group plc. Other appointments None ![img-9.jpeg](img-9.jpeg) Paul Vallone Executive Director Appointed 8 December 2017 Tenure 5 years 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 Milbank, 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. Paul will step down as an Executive Director of the Board at the conclusion of the 2023 AGM, but will remain in his current operational role and as a member of the Board of the Company's immediate subsidiary, The Berkeley Group plc. Other appointments None ![img-10.jpeg](img-10.jpeg) Karl Whiteman BSc (Hons) Executive Director Appointed 10 September 2009 Tenure 13 years 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. Karl is an Industry Sponsor (Building Safety) on the Board of the Construction Leadership Council. Karl will step down as an Executive Director of the Board at the conclusion of the 2023 AGM, but will remain in his current operational role and as a member of the Board of the Company's immediate subsidiary, The Berkeley Group plc. Other appointments Industry Sponsor - Building Safety, Construction Leadership Council Board Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 109 ## BOARD LEADERSHIP ANDCOMPANY PURPOSE | A focused and effective Board | and key responsibilities of the Board | Armour and Andy Myers will retire | | --- | --- | --- | | The Board has collective responsibility | can be found on pages 120 to 121 of | from the Board at theconclusion of | | for promoting the long-term success of | this report. | the 2023AGM. | the Company in a safe and sustainable Board and Committees’ Composition The Company has further taken this manner in order to create value for Having led the Board through a period opportunity to streamline the Board stakeholders. The Board provides of significant transition following his by reducing its size, and has therefore leadership and sets the Company’s appointment as Chairman on 23 July decided not to replace the three purpose, values and long-term 2020, Glyn Barker stepped down, as departing Non-executive Directors. strategic objectives. | | intended, as Non-executive Director, | Inaddition, three Executive Directors, | | --- | --- | --- | | During the year, the Board has | Chairman of the Board and Nomination | Justin Tibaldi, Paul Vallone and Karl | | focused on the Company’s purpose, | Committee and a member of the | Whiteman, will step down from the | | vision and values and has continued to | Remuneration Committee at the | Board at the conclusion of the 2023 | | oversee the embedding of the Group’s | conclusion of the 2022 AGM. | AGM. Justin, Paul and Karl will remain | | ambitious, ten-year strategic agenda, | | with the Company in their current | During the year, the Board, led by Our Vision 2030 across the business. operational roles and will remain as theSenior Independent Director, Details of howOur Vision 2030 has members of the Board of the Company’s concluded the Chairman succession been implemented across the business immediate subsidiary, The Berkeley process, which, on 8 June 2022, and updates on progress against Group plc. culminated in the appointment of targets can be found on pages 36 to Michael Dobson as Non-executive Following the retirement of the three 54 oftheStrategic Report and at Director, Chairman-designate and a Non-executive Directors, the following www.berkeleygroup.co.uk/ourvision. | | member of the Nomination Committee. | changes to Board and Committee | | --- | --- | --- | | Further information on how | Michael Dobson was subsequently | composition, with effect from the | | theCompany engages with its | appointed as Chairman of the Board | conclusion of the 2023 AGM, have | | stakeholders, and the impact on | and Nomination Committee and | been agreed: Rachel Downey will | | them,in implementing Our Vision | asamember of the Remuneration | replace Diana Brightmore-Armour | | 2030, is set out on pages 80 to 82 | Committee following the conclusion | asSenior Independent Director; | | ofthe Strategic Report. | ofthe 2022 AGM. | AndyKemp will replace Andy Myers | as Chairman of the Audit Committee; The Board recognises the role it Further details on the Chairman Natasha Adams will replace Andy playsin promoting the long-term succession process are set out on Kemp as Chair of the Remuneration sustainable success of the Company, page 123 of this report. Committee; William Jackson will join generating value for its shareholders During the year, under Michael’s the Remuneration Committee; and and contributing to wider society. leadership, the Board and Nomination Natasha Adams and Andy Kemp will As the UK’s leading placemaker, Committee have placed particular join the Nomination Committee. Berkeley’s purpose is to build quality focus on the composition of the Following these changes, the Board homes, strengthen communities and Boardand its Committees and will comprise nine directors: an improve people’s lives, transforming futuresuccession planning. Independent Non-executive Chairman, underutilised places to return On 6 September 2022, Natasha two Executive Directors and six sustainable social, economic and Adams was appointed as a member Non-executive Directors. This will environmental value. In implementing ofthe Remuneration Committee. result in full compliance with all Our Vision 2030 to ensure the delivery Thereafter, on 16 November 2022, aspects of Board composition under of long-term sustainable success for SirJohn Armitt stepped down, the Code and the Board meeting the all stakeholders, it is the Board’s role andRachel Downey was appointed, diversity targets set out in Listing Rule to ensure that this strategy and the asamember of the Nomination (LR) 9.8.6R(9)(a). Further explanation Company’s purpose, values and Committee. Additionally, on ofthe Board’s compliance with culture are fully aligned. | | 16 November 2022, Sarah Sands | LR9.8.6R(9)(a) is set out on pages | | --- | --- | --- | | Culture and values are central to | wasappointed as a member of | 126to 127 of this report. | | thesuccessful implementation of | theAuditCommittee. | | Meetings Berkeley’s strategy. At Berkeley, At the date of this report, the The full Board met formally five times theculture starts with the tone set Boardcomprises 15 Directors, the during the year ended 30 April 2023 bythe Board and encompasses all of Independent Non-executive Chairman, and there were no absences. the autonomous businesses and teams five Executive Directors and nine across the Group. Further details on During the year the Board has independent Non-executive Directors how the Board ensures that Berkeley’s revisited the schedule of matters and thus complies with the Code purpose, values and culture are considered by the Board and requirement that at least half of its embedded across Berkeley are enhanced its existing focus through Directors, excluding the Chairman, are setouton pages 112 to 113. the addition of further topic-specific Independent Non-executive Directors. deep dives, including in respect of The work of the Board provides As announced on 21 June 2023, and people, risk, business resilience direction, support and constructive recognising that three of the Non- andexternal positioning. We also challenge to the wider Executive team. executive Directors have now passed conducted an in-depth examination The duties of the Board are set nine years’ service, notwithstanding ofthe Company’s strategy, purpose, outinaformal schedule of matters the Board’s view that all three continue values and businessmodel. specifically reserved for decision toprovide independent scrutiny and bythe Board. More details on the challenge, the Board has agreed that governance structure of the Company Sir John Armitt, DianaBrightmore- 110 Berkeley Group 2023 Annual Report | There were also multiple email | During the year the Nomination | Additionally, the Board undertook | | --- | --- | --- | | exchanges and calls, including in | Committee maintained additional | acollective visit to St George’s Chelsea | | respect of periodic trading updates, | regular contact in considering the | Creek development of 1,200homes | | interim and full-year results and | Chairman succession process and | overlooking St William’s 16 acre, 1,900 | | interim dividends. | further reviewing Board composition | home King’s Road Park development. | and succession planning. | In addition to formal meetings of the | | Non-executive Directors also met with | | | --- | --- | --- | --- | | Board, the Non-executive Directors | The Remuneration Committee | members of the Executive Committee | | | met with the Chairman twice during | additionally maintained regular contact, | to gain first hand insight into the | | | the year. The Chief Executive and | over and above its scheduled meetings, | delivery of key priorities under the | | | Chief Financial Officer attended part | as it finalised the development, delivery | Company’s Our Vision 2030 strategy. | | | of these meetings in order to provide | and implementation of the 2022 | The review focused in particular on | | | an update on the business activities | Remuneration Policy and considered | Berkeley’s approach to engagement | | | ofthe Group, including in respect of | feedback from, and the outcomes of | with local communities with a view | Corporate GovernanceStrategic Report | | health and safety, finance, trading and | consultation with, investors and | tocreating places that strengthen | | | performance, fire safety and the entry | proxyadvisors. | communities beyond the site | | | into the Developer Pledge Long Form | | boundary through the production | | During the year, the Audit Committee Agreement. Thereafter, the Non- ofunique holistic plans for each additionally conducted a competitive executive Directors met without the individual development. tender process in respect of the Executive Directors being present. appointment of the Company’s Non-executive Directors also regularly During the year, the Non-executive external auditor. undertake a number of individual site Directors met without the outgoing visits to a wide range of Berkeley Further details of the Board’s activities Chairman present at a meeting Group developments across the during the year are set out on pages chaired by the Senior Independent various autonomous businesses 115 to 117. Director to review his performance. androutinely provide feedback The Board aims to hold a number of totheBoard as a whole. Financial Statements Board and Committee papers and meetings at key sites. These site visits agendas are sent out in the week are accompanied by a presentation priorto each meeting, thus allowing from the local divisional management sufficient time for detailed review team on the respective developments, andconsideration of the documents setting out the development challenges beforehand. In addition, the Board they have overcome, engagement issupplied with comprehensive withthe local community and the management information on overall financial performance of the aregularbasis. development, as well as othermatters oftopical interest. During theyear, the Board resumed full in-person meetings, predominantly atits Chelsea Bridge Wharf development. Sunningdale Park 111Berkeley Group 2023 Annual Report ## OUR CULTURE ### Berkeley’s unique culture is defined by our proud history and ### our deeply embedded purpose, values and vision for the future. ### It clearly reflects our passion for exceptional customer service, ### individual design, high quality placemaking, and our commitment ### to delivery for all stakeholders. ### Our culture is well understood throughout our business and ### hasa dynamic and energising effect on the way we work. ### Itsupports clear and decisive decision making. It inspires ### continuous improvement. It shapes our day-to-day behaviours, ### actions andexpectations of one another. And it drives our ### performance and outcome at all levels. Berkeley’s culture influences the relationships we hold with all stakeholders and is embedded in the business through our purpose, our values and our vision: ## OUR PURPOSE To build quality homes, strengthen communities and improve people’s lives. ## OUR VALUES Have Be Think Respect Excellence ##  integrity  passionate  creatively  people  through detail Build trust by Take pride in what Find individual Work together, Deliver the best beingopen, clear wedo and the solutions for every empower people through attention to andcredible. impactwe make. site and situation. and value their detail in everything contribution. we do. ## OUR VISION 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. 1. We put our customers at the heart of everything ## HOW DO WE 2. We are passionate about people and communities ## CHARACTERISE ## OURCULTURE? 3. We strive to enhance quality, in every small detail 4. We are sustainable, responsible and always think long-term These are the core features of the Berkeley culture. They are not rigid 5. We are highly collaborative, flexible and responsive partners rules, but dynamic and intrinsic 6. We value autonomy, independence and entrepreneurial flair features of the way we think, work and behave. 7. We are agile, decisive and trust our instincts 8. We lead by example, innovate and break the mould 112 Berkeley Group 2023 Annual Report ### How do we embed our culture? Berkeley believes that a strong, value-based working culture is the keydriver for long-term performance, customer loyalty and brand strength. This remains at the very heart of our strategy and the Board continues to actively cultivate, embed and reinforce our culture throughout every area of the business. Our obsession with culture is everywhere. We talk about it, write Corporate GovernanceStrategic Report 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 offices, sites and marketing suites. It is reinforced through our training We are sustainable, We value autonomy, programmes, performance targets and ## 4 6 ##  responsible and always  independence and staff awards. It sets the standards by thinklong-term entrepreneurial flair which we openly judge our behaviours, Environmental and social issues The Group operates through a network products, service and processes. | | arecentral to Our Vision 2030, | of 21 autonomous operating companies, | | --- | --- | --- | | These are the core features of the | thestrategy set by the Board, along | as well as a unique network of | | Berkeley culture. They are not rigid | with targets and actions to address | international offices in key markets | Financial Statements rules, but dynamic and intrinsic features them, which are closely monitored. across the globe. Strong central of the way we think, work and behave. Berkeley’s social responsibility does functions support this structure, not stop when developments are including Legal, Health and Safety We put our customers ## 1 completed; Berkeley continues to andCorporate Governance. ##  attheheart of everything support community projects that | At the early stages of a development | | | We are agile, decisive | | --- | --- | --- | --- | | | enhance how communities will live | 7 | | | the Board will challenge the business | | |  andtrust our instincts | into the future. For example, Berkeley to ensure appropriate innovations and The Board continually looks for ways is a member of the Blue Recovery specifications are captured, which will to advance the business and support Leaders Group, working with the ultimately lead to the highest quality the long-term success of the Company Wildfowl & Wetlands Trust (WWT) homes. The Board is kept informed of for the benefit of all stakeholders. tohelp fight the climate, nature and the outcomes of customer engagement Forexample, Berkeley was the first wellbeing crises by creating networks on a regular basis throughout their UKhomebuilder to publish a Climate of healthy wetlands across the UK. customer journey, and the Board Change Policy in 2007, setting our actively seeks to ensure that any We are highly first carbon reduction targets in 2010, ## 5 | issues arising are resolved promptly | |  collaborative,flexible | launching requirements for climate | | --- | --- | --- | --- | | and effectively. | | andresponsive partners | change adaptation in new developments | | | We develop long-term, collaborative | | from 2014 and achieving carbon | We are passionate about | 2 | | partnerships with local authorities, | neutral business operations for the | | --- | --- | --- | --- | | |  people and communities | | | | | | community organisations, landowners, | first time in 2018. The next phase of | Berkeley develops relationships with suppliers and charities which share our our programme has been the launch local partners to ensure that shared goals. Building these trusting, two- of science-based targets in 2021, objectives for the future of wholly way relationships is key to unlocking which have changed the way we inclusive communities are captured complex sites and maintaining delivery workfor the better. inCommunity Development Plans, and buy-in over the long-term. At | which are reviewed and signed off | | | We lead by example, innovate | | --- | --- | --- | --- | | | Grand Union we developed a strong | 8 | | | bythe Executive Committee. | | |  and break the mould | partnership with the London Borough Berkeley is the only large UK | | We strive to enhance quality, | of Brent which has culminated in the | | | --- | --- | --- | --- | | 3 | | | homebuilder focused on the | | |  in every small detail | creation of the Grand Union Community | | regeneration of complex large-scale Prior to construction, the Executive Development Trust which brings brownfield projects at scale. We have Committee reviews and signs off together St George, the council built up the breadth of expertise, detailed plans and specifications andlocal community leaders. financial strength and holistic place- ofeach development. Directors making approach needed to patiently undertake regular visits to sites transform these challenging sites into throughout the course of construction highly connected, accessible and to ensure the quality of construction welcoming neighbourhoods, where and detailed specification of all homes homes are conveniently served by a is of the highest standard. Non- high concentration of new and existing executive Directors additionally local infrastructure and amenities. undertake site visits and their feedback in highlighting differing stakeholder perspectives is valued and acted upon at Board level and across the Group. 113Berkeley Group 2023 Annual Report ## STAKEHOLDER ENGAGEMENT ### The role of the Board is to deliver value to all How the Board engages with ### stakeholders and promote the long-term sustainable shareholders and employees: ### success of the Company. The Board recognises the Shareholders During the year under review, the ### importance of engaging with all of its stakeholders, Chairman of the Remuneration ### aswell as its shareholders, around all aspects of the Committee consulted extensively with ### Group’s activities. Our stakeholders influence the major investors and proxy advisors, both ahead of the finalisation of the Group’s ### decision making of the Board across all aspects of the 2022 remuneration policy and also ### Company’s activities and the impact of the Board’s following its approval at the 2022 AGM. ### decisions is always considered in applying the long- The Company additionally continues ### term strategy for the business, Our Vision 2030. to undertake active dialogue with its current and prospective institutional The Directors engage directly with stakeholders in a number of shareholders through annual and different ways. For more details on how the Board has considered interim presentations and additional thes.172(1) requirements, see pages 79 to 83. meetings and calls, as well as site visits. During 2022/23 discussions focused around the half year and year end, and covered topics such as operations, performance, markets, business strategy and capital allocation, interim and full year results and governance matters. Customers Shareholders are also kept up to date with the Company’s activities through the Annual Report, interim results announcements and trading updates. In addition, the corporate website Communities provides information on the Group andlatest news, including regulatory announcements and corporate governance updates. The presentations made after the announcement of the Environment preliminary and interim results are ## STAKEHOLDER alsoavailable on the Investor section ## ENGAGEMENT ofthe website. The Board is also kept informed of shareholder views through periodic reports from the Company’s brokers, UBS and Barclays. The Chief Executive and Chief Financial Officer meet with the Investors majorshareholders twice annually to discuss the strategy and operations ofthe Group as well as any issues the Employees 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 talented and skilled workforce that will work together in a safe, healthy and supportive environment, and take pride in delivering outputs ofthe highest quality that deliver value to customers, local communities and other stakeholders. The Board recognises that talented and motivated employees are the 114 Berkeley Group 2023 Annual Report Company’s strongest resource. The Bribery Act and Anti-Money Timeline health and safety of our employees is Laundering Regulations paramount, in terms of both physical The Board has responsibility for ## 2022 | and mental wellbeing, and this continues | complying with the requirements | | | --- | --- | --- | | to be a key area of focus for the Board | ofthe Bribery Act 2010 and The | 30 May 2022 Board approved the | | through Our Vision 2030. | Money Laundering, Terrorist | retirement of Glyn Barker as Chairman | | | Financingand Transfer of Funds | and Non-executive Director with effect | In addition to ensuring the safe (Information onthe Payer) from conclusion of 2022 AGM operation of our sites for the health Regulations2017 and is charged and wellbeing of our employees and 8 June 2022 Appointment of Michael withoverseeing the development subcontractor workforce, the Board Dobson as Non-executive Director, andimplementation of the Group’s engages with employees in a number Chairman Designate and member policies and procedures thereon of different ways; the Chief Executive oftheNomination Committee andmonitoring ongoingcompliance. | and Chief Financial Officer regularly | | 22 June 2022 Board approved the 2022 | Corporate GovernanceStrategic Report | | --- | --- | --- | --- | | visit the operating companies and | Board activities during the | full yearresults | | | developments under construction to | year and key focus areas | 3 August 2022 Publication of the 2022 | | | engage with employees and oversee | The governance structure on pages | Annual Report and Accounts, Notice | | | the site activities. Members of the | 120 to 121 of this report sets out | of2022 AGM and Publication of Circular | | | Board are present at staff conferences | thekey responsibilities of the | inrespect of 2022 Remuneration Policy, | | | to provide business updates and | BoardofDirectors. | 2022 Restricted Share Plan (2022 RSP) | | | encourage open group discussions. | | and 2022 Long-Term Option Plan | | These key responsibilities are met Non-executive Directors regularly (2022LTOP) through a number of standing agenda undertake site visits and engage 11 August 2022 Declaration of interim items for which reports are presented directly with local teams. dividend of 21.25 pence per share and debated, covering, for example, payable on 9 September 2022 | The people engagement forum | health and safety, finance and | | | | --- | --- | --- | --- | | isasingle platform for reviewing | performance, risk, customer service, | 5 September 2022 Board site visit to | Financial Statements | | employee matters, sharing best | ESG-related matters, the housing and | Chelsea Creek development | | | practice and capturing its output for | sales market, and investor relations. | | | 6 September 2022 In-person AGM held the Executive Committee and Board. at the offices of Herbert Smith Freehills The output of these valuable This year, divisions have shared best LLP in London, including shareholder discussions held at Board meetings, practice from their local people plans, approval of 2022 Remuneration Policy, which benefit from thebroad including items such as health and 2022 RSP and 2022LTOP experience of the Non-executive wellbeing provisions, EDI initiatives Directors, informs thestrategy for 6 September 2022 Glyn Barker retired as and exit interviews, which have helped each area. Non-executive Director, Chairman of the to inform the development of our Board and Nomination Committee, and Group People Framework. This new This is then fed back into each member of the Remuneration Committee document sets the structure for action operating company by the Executive 6 September 2022 Michael Dobson to be taken at a Group level and for Directors in the local operating appointed as Chairman of the Board and aconsistent approach in five areas company board meetings. Nomination Committee and as a member across our operating businesses, In addition to reviewing the Group’s of the Remuneration Committee including employee engagement, strategy, purpose and values, considering 6 September 2022 Natasha Adams attraction and recruitment, equity, matters relevant tothe signing of the appointed as a member ofthe diversity and inclusion, staff upskilling developer self-remediation terms and Remuneration Committee and employee benefits and wellbeing. contract, and considering governance 16 November 2022 Sir John Armitt Whistleblowing outcomes and actions in response to stepped down and Rachel Downey The Group has a Whistleblowing Policy, the previous year’s Board evaluation, appointed as members of the which has been communicated to all theBoard additionally undertook Nomination Committee employees. In accordance with this anumber of deep dive reviews into 9 December 2022 Board approved policy, Directors, management, topics including risk, business resilience, the2022/23 Interim Results employees and external stakeholders people and external positioning. can report in confidence, outside of The focus of Board activities falls ## normal reporting channels, any 2023 largely intofour areas: strategy, concerns they may have of malpractice, operations finance and governance. 23 February 2023 Declaration of financial irregularity, breaches of any interim dividend of 69.44pence per Group procedures, orother matters. share payable on 24 March 2023 Any such concerns are subject to | proportionate and independent | 2 March 2023 Board meeting and | | --- | --- | | investigation. The policyis available | dinner with members ofthe Executive | | toview on the Group’s website. | Committee to review delivery of Our | Vision 2030 priorities and focus on strategic approach to local communityengagement 13 March 2023 Group enters into self-remediation terms andcontract 21 June 2023 Changes to Board composition announced. For further information, see page 123. 115Berkeley Group 2023 Annual Report ## STAKEHOLDER ENGAGEMENT CONTINUED ## STRATEGY OPERATIONS Strategy has formed a key part of Board focus this year, Construction activity at London Dock, Wapping with a number of newer Directors and a new Chairman. At a dedicated meeting, the Board received and discussed a report on the strong linkage between the Company’s purpose, values, culture and strategy, which the Board unanimously endorsed. Our Vision 2030 The Board continues to monitor performance against the Our Vision 2030 targets and long-term goals, receiving progress reports at each meeting. Our Vision 2030 Executive board meetings are held monthly to review progress against the targets and to drive performance. Macro-environment, financial strength, capital allocation and shareholder return strategy Reflecting both the nature of the residential property market and today’s macro-economic climate, the Board regularly reviews and considers theoptimal relationship between financial strength, liquidity and shareholder returns, to ensure the flexibility andagility to respond promptly and effectively to market opportunities. Planning status of future developments The Board receives updates at each meeting on the planning environment and planning status of key sites covering the development plans, community engagement and planning milestones. In particular, the Board develops mitigation strategies to deal with an ever increasingly difficult planning landscape. Regulatory changes The Board is provided with regular updates on changes to the regulatory landscape, considering their impact Risk when applying the Board strategy. The Board has Operational and strategic risk are discussed at each monitored the introduction of the regulatory framework meeting of the Board, with new and emerging risks relating to the Building Safety Act 2022 and awaits detail considered on an ongoing basis. During the year, the on the introduction of second staircases in tall buildings. Board allocated one of its meetings to discuss and Modular factory debate the evolving risk landscape and the implication The Board has received regular updates on research ofthis to Berkeley’s strategy. anddevelopment at the Berkeley Modular factory in Health and safety incidents Kent. Following the testing of prototype modules during Being mindful of its industry leading approach to health the year, a number of modular homes are presently under and safety, the Board keeps under review initiatives to construction at the Company’s Kidbrooke site. improve yet further in this area. Further details of the Progress against climate change commitments and Company’s health and safety approach are set out on approach to sustainability page 50 of theStrategic Report. In accordance with the commitments in Our Vision 2030, Fire safety and developer pledge the Board has continued to review the targets to meet its During the year, the Board authorised the signature climate change and sustainability commitments. Further oftheGovernment’s Self-Remediation Terms and details of the Group’s performance in respect of ESG Contract and is assessing what works, if any, are matters of strategic importance to the Group are set neededfollowing the fire safety assessments being outon pages 58 to 59 of the Strategic Report. instructed under the arrangements. Cyber security and data protection CMA study into new housing supply Ever mindful of continuing cyber security risks and data Following the announcement that the Competition protection requirements, the Board reviews emerging andMarkets Authority is to undertake a study into threats and responses. Through a steering group chaired newhousing supply, the Executive Directors gathered by the CFO that meets monthly, the Group assesses and theinformation to submit to the study. actions opportunities for improvement and to ensure rapidresponse in the event of a specific cyber threat. Supply chain resilience, including availability ofmaterials and cost inflation Political and Public Affairs The Commercial Committee, which is chaired by an As a specific agenda item at a meeting during the year, Executive Board member, continues to mitigate risks theBoard received a presentation on the current political around global supply chain issues, product availability landscape and public affairs from a leading external times and increasing costs. The Board receives updates consultant, to help shape Berkeley’s communication at each meeting. andengagement approach. 116 Berkeley Group 2023 Annual Report ## FINANCE ### Shareholder Returns The Board reaffirmed its long-term shareholder returns programme, based upon an ongoing annual return of £283 million planned through to September 2025. This is delivered through two equal tranches of £141.4 million in the periods to 31 March and 30 September each year and can be made through either dividends or share buy-backs. The Board has committed to the next ongoing scheduled shareholder return, which is the £141.4 million in respect of the six months ending 30 September 2023, against which £35.2 million has been returned via share buy-backs. ### Funding and liquidity In February 2023, Berkeley exercised the first of two one-year extensions on its £800 million bank facility, which extended the term thereof to February 2028, with one remaining extension option available. The overall borrowing capacity was unchanged during the year at £1,200 million, comprising the £800 million bank facility with a term to February 2028 and £400 million unsecured listed bonds which mature in August 2031. ### Annual Report and Accounts During the year, the Board reviewed and approved the Annual Report and Accounts and interim results, along with associated press releases and trading updates. ### Auditor Tender Process KPMG was appointed as the Group's auditor with effect from 1 May 2014. During the year, in accordance with the Code and applicable legal and regulatory requirements, the Audit Committee undertook a competitive tender process in respect of the appointment of the external auditor of the Company and its subsidiaries. Following a comprehensive process, the Audit Committee recommended to the Board that KPMG be re-appointed as the Group's external auditor. The Board approved the re-appointment of KPMG and a resolution to re-appoint KPMG as auditor to the Company will be proposed at the 2023 AGM. ### Company tax policy The Group's tax strategy is overseen by the Board. 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. ## GOVERNANCE ### Chairman succession In July 2020, Glyn Barker was appointed Chairman of Berkeley for a two year term to facilitate the effective development and transition of the Board, as envisaged by Provision 19 of the Code. As intended, Glyn Barker stepped down as Chairman and Non-executive Director on conclusion of the 2022 AGM. Diana Brightmore-Armour, Senior Independent Director, led the process for the appointment of Glyn's successor as Chairman, which concluded with the appointment of Michael Dobson as Non-executive Director and Chairman Designate on 8 June 2022 and as Chairman of the Board and Nomination Committee on 6 September 2022. Further details about the process are provided on page 123. ### Board and Committees' composition Over the course of the year, the Board has continued to focus on the composition of the Board and future succession planning as follows: ### Non-executive Director independence As at the date of this report, three Non-executive Directors have served on the Board for more than nine years: Sir John Arnett, Diana Brightmore-Armour and Andy Myers. In accordance with Provision 10 of the Code, the Board has reviewed the independence and contribution of these three directors and concluded that they each continue to maintain and contribute an independent view in all Board deliberations, consistently providing robust challenge and scrutiny. Notwithstanding the considered independence, in line with best practice corporate governance, it has been agreed that Sir John Arnett, Diana Brightmore-Armour and Andy Myers will step down from the Board at the conclusion of the 2023 AGM. ### Future Board and Committees' composition The Board has decided to take this opportunity to streamline the Board and will not therefore replace the three departing Non-executive Directors. In addition, three Executive Directors, Justin Tibaldi, Karl Whiteman and Paul Vallone, will step down from the Board at the end of the 2023 AGM, in line with best corporate governance practice. During the year and following the above changes, the Board has further agreed a number of changes in Committees' composition. Further details are set out on page 123. ### Remuneration policy In 2022, the Remuneration Committee developed a revised remuneration policy which was put to shareholder vote at the 2022 AGM. The Chairman of the Remuneration Committee consulted extensively with the Company's largest shareholders and proxy advisers in respect of the new policy. Further details are set out in the Remuneration Report on pages 132 to 156. ### Board evaluation The Code requires that the Board undertakes an annual evaluation which is externally facilitated at least once every three years. As the last external Board review was undertaken in 2020/2021, the review for 2022/23 was conducted internally. For full details of the 2022/23 Board evaluation, see page 125. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 117 ## BOARD SITE VISIT ### In September 2022, the Board visited ### St George’s Chelsea Creek and St William’s ### King’s Road Park developments in Fulham. Whilst on site, the Board met with the managing directors of St George and St James/St William, as well as a number of the sales and construction staff on each of these sites. They toured the sales and marketing suite at Chelsea Creekand ascended the part constructed 31-storey tower, The Imperial, to see the construction process and overlook the adjacent St William King’s Road Park development which is in the early stages of construction. Right: View of Chelsea Creek from The Imperial, the landmark 31-storey final building under construction, that will complete this development of over 1,200 new homes Above: Chelsea Creek’s Canal side apartments, in central London Left: View from The Imperial of construction activity at the adjacent King’s Road Park where St William are transforming this redundant 16-acre gasworks into 1,800 homes, with the site’s Grade II* Listed gasholder, thought to be the oldest surviving in the world, being carefully restored as the centre piece of a new community park 118 Berkeley Group 2023 Annual Report ## DIVISION OF ## RESPONSIBILITIES Board Committees ### The Board has a range of experience and has strong The Board has delegated certain ### knowledge in areas of property development, construction, matters to individual Executives and to ### media and communications, public sector, Government, the specific Committees of the Board: ### communities, inclusivity and social engagement, finance Nomination, Audit and Remuneration. The three main Board Committees ### and banking, and commerce and governance, both in the operate within clearly defined Terms Corporate GovernanceStrategic Report ### UK and internationally. It is thebalance of skills, experience, ofReference pursuant to the provisions ### independence and knowledge of the Board as a whole of the Code. The Terms of Reference foreach of the three main Board ### which ensures that the duties and responsibilities of the Committees canbe downloaded from ### Board and its Committees are discharged effectively. the Corporate Governance page of theInvestor section of the Company’s website. Copies are alsoavailable to shareholders on application to the Company Secretary. The responsibilities The Chairman leads the Board and is them to discharge their respective of the key Board Committees are responsible for the overall effectiveness duties and responsibilities effectively. described within the relevant reports of the Board and its Committees, Each Non-executive Director is onpages 122, 128 and132. | forsetting and shaping the culture | prepared to question and to challenge | | Financial Statements | | --- | --- | --- | --- | | intheBoardroom and the Company, | management. All of the Non-executive | Conflicts of interest | | | overseeing high standards of corporate | Directors are considered to have been | In accordance with the Companies | | | governance, ensuring theBoard | independent throughout the year. | Act2006, the Company’s Articles | | | determines the nature and extent | | ofAssociation allow the Board | | The Board reviews the independence of ofsignificant risks the Company is toauthorise potential conflicts Non-executive Directors on an annual willing to embrace in the implementation ofinterestthat may arise and to basis taking into account each of itsstrategy, ensuring effective imposesuch limits or conditions as individual’s professional characteristics, communications between the Board itthinks fit. The decision to authorise behaviour and theircontribution to and shareholders and ensuring the aconflict ofinterest can only be made unbiased and independent debate. See Board understands the views of the by non-conflicted Directors (those page 117 of this report for more details. Company’s keystakeholders. who have no interest in the matter The Group operates through being considered) and in making The Chief Executive has day to autonomous divisions and operating sucha decision the Directors must dayexecutive responsibility for the companies, each with its own board. actin a way they consider in good running of the Group’s businesses. Operating company boards meet on a faith will bemost likely to promote Hisrole is to lead the Group’s strategic weekly basis and divisional boards on theCompany’s success. direction and propose, develop and a monthly basis, and comprehensive deliver the overall strategy and The Company has established a information is prepared for such business plans, to enable the Group procedure whereby actual and meetings on a standardised basis tomeet its objectives, to oversee and potential conflicts of interest of tocover all aspects of the business. maintain relations with investors and current and proposed roles to be Formal reporting lines and delegated other key stakeholders, toensure the undertaken by Directors of the levels of authority exist within this appropriateness of the Group’s risk Boardwith other organisations are structure and the review of risk and management strategy, andto ensure regularly reviewed in respect of both performance occurs at multiple levels effective policies and procedures the nature of those roles and their throughout the operating companies, forthe management, development time commitment, and for proper divisions and at Board level. andsuccession planning of the authorisation to be sought prior to management team and the Strong central functions, including theappointment of any new Director. Company’sstaff. Legal, Health and Safety and The Board considers these procedures Corporate Governance, provide to be working effectively. The Senior Independent Director’s support and consistency to the Board. primary role is to work closely with In addition, the principal treasury- theChairman, serving as a sounding related risks, decisions and control board, providing support in the processes aremanaged by the Group delivery of objectives and serving as Finance function, under the direction an intermediary for other Directors of the Chief Financial Officer. and shareholders. See pages 120 to 121 for details of The Non-executive Directors, led by theresponsibilities of the Board. the Senior Independent Director, Diana Brightmore-Armour, have the skills, experience, independence and knowledge of the Company to enable 119Berkeley Group 2023 Annual Report ## GOVERNANCE CONTINUED ### Responsibilities of the Board Non-executive Chairman Senior Independent Director Non-executive Directors Michael Dobson Diana Brightmore-Armour Andy Myers Andy Kemp Responsibilities: Responsibilities: Sir John Armitt — leading the Board and ensuring — working closely with the Rachel Downey itsoverall effectiveness, setting Chairman, serving as a sounding Elizabeth Adekunle the agenda and ensuring that board and providing support William Jackson accurate, timely and clear andadvice in the delivery Sarah Sands information is provided to ofobjectives; Natasha Adams theBoard as required; — leading the Chairman Responsibilities: — setting, shaping and sustaining successionprocess; — bringing an external perspective the culture in the Boardroom — serving as an intermediary for in providing additional advice andthe Group; other Directors and shareholders, andexpertise to support the — overseeing the implementation including meeting with Non- Board in setting, developing and of high standards of corporate executive Directors annually, monitoring the implementation governance; without the Chairman present ofthe Group strategy; toevaluate the Chairman’s — encouraging constructive Board — providing sound judgment, performance, and provide relations and open debate and objectivity and an appropriate feedback to the Chairman ensuring that each Director level of constructive challenge andChief Executive Officer; and contributes to effective decision and scrutiny of Board decisions; making; and — being available to shareholders — serving on Board Committees and other Non-executive — ensuring effective communication toensure that fair and balanced Directors to address any concerns between the Board and policies are implemented, not otherwise dealt with through shareholders and ensuring the including Executive remuneration usual channels of communication. Board understands the views of and risk management; and the Company’s key stakeholders. — having an awareness of shareholder and other stakeholder matters and offering guidance asrequired. ### Board committees Nomination Audit Remuneration ## N Chair: Michael Dobson A Chair: Andy Myers R Chair: Andy Kemp The Nomination Committee The Audit Committee is responsible The Remuneration Committee is ensuresthat the membership and for monitoring and reviewing the responsible for determining the composition of the Board, including financial reporting and accounting Company’s policy for Executive the balance of skills, experience policies of the Company, reviewing remuneration and the precise terms anddiversity, is appropriate, as the adequacy of internal controls and of employment and remuneration wellas giving full consideration the activities of the Group’s internal ofthe Non-executive Chairman tosuccession planning on a audit function, including financial, andthe Executive Directors. regularbasis. operational and compliance controls, and overseeing the effectiveness of the external auditor. See page 122 for the Report of See page 128 for the Report of See page 132 for the Report of theNomination Committee. theAudit Committee. theRemuneration Committee. 120 Berkeley Group 2023 Annual Report Chief Executive Officer Chief Financial Officer Executive Directors Rob Perrins Richard Stearn Justin Tibaldi Paul Vallone Responsibilities: Responsibilities: Karl Whiteman — day-to-day running of the Group’s — managing the financial affairs businesses and operations; ofthe Group, including investor Responsibilities: relations, tax, treasury, internal — leading the Group’s strategic — operational aspects of audit and insurance functions; direction, proposing, developing implementing the Group’s and delivering the overall strategy — managing the relationship strategy, including land and business plans to enable the withthe external auditor; acquisitions, planning, Corporate GovernanceStrategic Report Group to meet its objectives, construction and sales of homes — strategic risk management having regard to the needs of and commercial properties; oftheGroup; and keystakeholders; — driving performance and — oversight of the IT and — overseeing and maintaining innovation across the business; HRfunctions. relationships with investors — ensuring sustainability and andother key stakeholders; environmental targets are met — ensuring the appropriateness of across the developments; the Group’s risk management — people and employee matters; strategy; and — customer service matters; — ensuring effective policies and procedures for the management, — health and safety strategy; and Financial Statements development and succession — placekeeping and sustainable planning of the management residential stewardship. teamand the Company’s staff. ### The Executive Committee The Executive Committee meets along with the Group Solicitor, — cash management; regularly and reviews the financial WendyPritchard, the Head of — delivery of Group strategy; and operating performance of all Responsible Business, Lorraine — legal and regulatory matters; Group divisions and companies. The Fursland, and is supported by the — brand and reputation; Committee is chaired by the Chief Company Secretary, Ann Dibben. — relationships with local authority Executive and comprises the CEO, and Government stakeholders; and Key responsibilities include: the CFO, the heads of the Group’s — people. — business planning; main operating divisions, Justin — reviewing the financial and Tibaldi, Paul Vallone, Karl Whiteman, operating performance of all Piers Clanford, Alison Dowsett, Groupdivisions and companies; Elkie Russell and Dean Summers, — risk management; Divisional and operating — Health and safety — Production company boards — Sales and marketing — Assessing the impact of the — Land and planning economic and political environment Key responsibilities include: — People retention and development — Site-specific matters — Regulatory matters — Customer service Operational committees — Health and Safety — Land and Planning — IT — Commercial and Technical Key responsibilities include: — Production — Sales and Marketing — People — Sustainability — Customer Service — Estates Management 121Berkeley Group 2023 Annual Report NOMINATION COMMITTEE REPORT # INTRODUCTION The Board of Directors presents its Nomination Committee Report for the year ended 30 April 2023. ![img-11.jpeg](img-11.jpeg) Michael Dobson, Chairman, Nomination Committee # Committee purpose and responsibilities The key responsibilities of the Committee include: - reviewing the structure, size and composition of the Board and Board Committees and making recommendations to the Board having regard to succession planning and supporting diversity; - evaluating the balance of skills, knowledge and experience and diversity on the Board; - leading the process for identifying and nominating candidates for Board vacancies; and - led by the Senior Independent Director, without the Chairman being present, reviewing and implementing Chairman succession. The Committee's Terms of Reference set out its full remit and can be downloaded from the Investor section of the Berkeley website (www.berkeleygroup.co.uk/investors/corporate-governance). Membership meetings and attendance | Committee member | Date of appointment to Committee | Meeting attendance | % of meetings attended | | --- | --- | --- | --- | | Michael Dobson (Chairman)* | 8 June 2022 | ●● | 100% | | Glyn Barker (Chairman)** | 18 April 2018 | | 0% | | Diana Brightmore-Armour | 15 October 2015 | ●●●●● | 100% | | Sir John Arnitt*** | 23 July 2020 | ●●●● | 100% | | William Jackson | 5 January 2021 | ●●●●● | 100% | | Rachel Downey | 16 November 2022 | ● | 100% | * Michael Dobson was appointed Chairman of the Nomination Committee at the conclusion of the 2022 AGM on 6 September 2022. ** Chairman of the Nomination Committee from 23 July 2020. Glyn Barker stepped down as Chairman and a member of the Nomination Committee on his retirement from the Board at the conclusion of the 2022 AGM on 6 September 2022. In accordance with Provision 17 of the Code, Glyn Barker absented himself from meetings of the Nomination Committee between May 2022 and June 2022 as these dealt solely with the appointment of his successor as Chairman of the Board. *** Sir John Arnitt stepped down as a member of the Nomination Committee on 16 November 2022. 122 Berkeley Group 2023 Annual Report # Meeting items discussed # May 2022 (1st meeting) - Chairman succession # May 2022 (2nd meeting) - Chairman succession # June 2022 - Chairman succession # October 2022 - Board and Committees' composition and succession planning - Committee changes # April 2023 - Board and Committees' composition and succession planning - Board and Committees' changes - Diversity and inclusion # Committee Activities During the year the Nomination Committee continued to focus on the Chairman succession process, which culminated, on 6 September 2022, in Michael Dobson formally succeeding Glyn Barker as Chairman of the Board and Nomination Committee. Further details in respect of the Chairman succession process are set out on page 123. Led by Michael Dobson, following his appointment as Chairman of the Board and Nomination Committee, the Committee gave further consideration to immediate Board and Committee composition, having regard in particular to tenure, independence and ensuring a diverse and inclusive mix of skills, knowledge and experience. Details of Board and Committee changes throughout the year and of further changes to take effect from the 2023 AGM are set out on page 123 of this report. The Committee additionally had regard to longer-term succession planning and diversity and inclusion matters. During the year, the Committee approved for recommendation to the Board a discrete Board Diversity Policy, which was subsequently approved by the Board, a copy of which is available on the Company's website at www.berkeleygroup.co.uk/investors/corporate-governance. An update in respect of diversity and inclusion is provided on pages 126 to 127. | Chairman Succession | On 6 September 2022, following | Upon the retirement of the three | | --- | --- | --- | | Led by the Senior Independent | theconclusion of the 2022 AGM, | Non-executive Directors, a number | | Director, without the Chairman | Michael Dobson replaced Glyn Barker | offurther changes to Board and | | present, the Nomination Committee | as independent Non-executive | Committees’ composition will take | | concluded the process during the | Chairman of the Board and Nomination | place with effect from the conclusion | | yearof identifying and appointing | Committee and as a member of the | of the 2023 AGM: Rachel Downey will | | thesuccessor to Glyn Barker as | Remuneration Committee. | replace Diana Brightmore-Armour as | | Chairman of the Group. | | Senior Independent Director; Andy | Board and Committees’ Composition Kemp will replace Andy Myers as A full overview of the Chairman and Succession Planning Chairman of the Audit Committee; succession process was provided During the year the Committee Natasha Adams will replace Andy inthe Company’s 2022 Corporate furtherreviewed the Board’s Kemp as Chair of the Remuneration Governance Report. During the composition to ensure that it had the Committee; William Jackson will join previous year, the Committee Corporate GovernanceStrategic Report correct balance of skills, experience the Remuneration Committee; and appointed Ridgeway Advisors and knowledge required for the Natasha Adams and Andy Kemp will (nowTeneo People Advisory), leadership of the Group. Consideration join the Nomination Committee. anindependent executive search was given tosuccession planning for consultancy and signatory to the The process for identifying and both Non-executive Directors and Enhanced Code of Conduct for recommending new appointments Executive Directors with the intention Executive Search Firms on gender tothe Board includes a combination of maintaining and developing still diversity, to assist with the Chairman of discussions and consultations, further a strong and diverse Board. | succession process. Ridgeway had | | inaddition to formal interviews, | | --- | --- | --- | | noconnections to the Company or | On 6 September 2022, Natasha Adams | andutilises the services of an | | any of its individual Directors. | was appointed as a member of the | independent recruitment specialist, | | | Remuneration Committee. Thereafter, | when appropriate. In accordance | During the year, the Committee, with | | on 16 November 2022, Rachel Downey | withthe Board Diversity Policy, | | | --- | --- | --- | --- | | Ridgeway’s support, further developed | | | Financial Statements | | | replaced Sir John Armitt as a member | whenconsidering the use of open | | a shortlist of three candidates. Ridgeway of the Nomination Committee. advertising or executive search held discussions with the candidates, consultants to facilitate the search for who then partook in a robust interview During the year, the Committee had Board appointments, Berkeley will use process. Ridgeway then assessed particular regard to the outcome of only those firms that have adopted the compatibility with the specification, the 2021/2022 Board evaluation, Voluntary Code of Conduct in respect interest in the role, future commitments including in respect of matters of of diversity, including in respect of and time availability, independence tenure and independence. gender and ethnicity. Other than and any potential conflicts of interest. | | As announced on 21 June 2023, | inrespect of Chairman succession, | | --- | --- | --- | | Short-listed candidates met with the | SirJohn Armitt, Diana Brightmore- | further details of which are set out | | Senior Independent Director and | Armour and Andy Myers will step | above, there have been no new | | members of the Nomination Committee | down from the Board and retire | appointments to the Board during | | and also had the opportunity to meet | asNon-executive Directors at the | theyear ended 30 April 2023. | | with the Chief Executive. | conclusion of the 2023 AGM, each | | The Articles of Association of the having passed nine years’ service on Following the process, Michael Company include the requirement the Board, in line with best corporate Dobson was considered by the forDirectors to submit themselves governance practice. Committee to be the most suitable toshareholders for re-election every candidate for the role due to his The Company has further decided three years. In addition, all Directors substantial leadership, financial and totake this opportunity to streamline are subject to election by shareholders investor experience and his appreciation the Board by reducing its size and so at the first opportunity after their of the Berkeley culture. will not be replacing the departing appointment and thereafter at Non-executive Directors. intervalsof no more than three years. The Board approved the recommendation In accordance with the requirements of the Committee, agreeing that Michael In addition, three Executive Directors, ofthe Code, all Directors, with the was independent on appointment. Justin Tibaldi, Paul Vallone and Karl exception of Sir John Armitt, Diana Whiteman will also step down from Accordingly, Michael joined the Brightmore-Armour, Andy Myers, the Board at the conclusion of the Boardas a Non-executive Director, Justin Tibaldi, Paul Vallone and Karl 2023 AGM. Justin, Paul and Karl will Chairman Designate and member Whiteman, who will be stepping remain in their current operational ofthe Nomination Committee on down,will be offering themselves roles and as members of the Board of 8 June 2022. forre-election at the 2023 AGM the Company’s immediate subsidiary, tobeheld on 8 September2023. | At the conclusion of the 2022 AGM, | The Berkeley Group plc with Rob | | --- | --- | | Glyn Barker stood down as a Non- | Perrins and Richard Stearn, the | | executive Director, Chairman of the | Group’s CEO and CFO. | Board and Nomination Committee and Following these changes, the Board as a member of the Remuneration will comprise an independent Non- Committee. The Committee is executive Chairman, two Executive immensely grateful to Glyn Barker for Directors (the CEO and CFO) and six his stewardship of the Company and, Non-executive Directors. The Board through this Committee, the transition size will therefore be reduced from of the Board over the previous two fifteen to nine. years and for his service over the previous nine years. 123Berkeley Group 2023 Annual Report ## NOMINATION COMMITTEE REPORT CONTINUED | Induction and Development | Members of the Audit and Remuneration | | | | --- | --- | --- | --- | | On appointment, Non-executive | Committees receive briefings from the | Board composition | | | Directors are provided with a | Group’s auditor and remuneration | | | | detailedinduction programme. This | advisor respectively to ensure that | | | | covers an overview of the Group’s | theyremain up to date with current | | | | operations and its policies, corporate | regulations and developments. All | | | | responsibility and corporate affairs | Directors have access to advice from | | | | issues, legal matters and also the | the Company Secretary and independent | | | | opportunity to meet with Directors | professional advisors, atthe Company’s | | £216.4m | | and key senior employees and to | expense, where specific expertise is | | | | visitthe Group’s sites. | required in the course of their duties. | | | | Ongoing training is available to all | Recognising that six directors will | | | | Directors to meet their individual | bestepping down from the Board | | | | needs. Board members also receive | on8 September 2023 and that a | | | | regular guidance and updates on | number of Non-executive Directors | | | Chairman regulatory matters and the corporate have served on the Board for less Executive governance framework in which the thanthree years, a fresh perspective Group operates. Additionally, during to Non-executive Director training and the year, Directors received training knowledge sharing will be considered onthe Market Abuse Regulations. and developed during the year ahead, in line with the recommendations of the 2022/2023 Board evaluation. What we bring to the Board A Gender split A Commerce/Governance (9) B Finance/Banking (5) C Other current PLC boardexperience (5) D Recent relevant financialexperience (3) E Public sector/Government/ £216.4m Community (4) F International (6) G Construction (3) H Development (2) I People (2) B J Media/Comms (1) Male Female 33.33% J C I Non-executive Director tenure H D G £216.4m E 0–3 years 3–6 years F 7–9 years 124 Berkeley Group 2023 Annual Report 6 1 1 66.66% 2 5 Non-executive Director 9 10+ years 1 Strategic Report Corporate Governance Financial Statements ## 2021/22 EVALUATION Following the 2021/22 Board evaluation, the Board set itself the following goals, progress against which is as follows: Focus area Progress against each goal Integration and embedding of Following conclusion of the Chairman succession process, Michael Dobson thenew Chairman within both succeeded Glyn Barker as Chairman of the Board on 6 September 2022. theBoard and the Group Duringthe year, the Chairman has met extensively with Directors, shareholders and key individuals within the business and visited a wide range of sites. Review of standing Board papers to During the year a number of changes to Board papers were introduced identify opportunities for refinement suchthat these are now more succinct, while still enabling a valuable and more concentrated focus overviewof significant prevailing issues and providing a clear steer on thebusiness of meetings. Further progress the next phase of During the year, the Committee continued to keep under review future Board Board and Committee succession and Committees’ succession planning. A number of changes to Committees’ planning, having regard to mix of composition took place during the year. In addition, further changes to Board skills, experience and diversity and and Committees’ composition were announced on 21 June 2023, to take effect inclusion objectives from the conclusion of the 2023 AGM. Further details are set out on page 123. Turn particular attention to Recognising that three Non-executive Directors will have exceeded nine-years’ SeniorIndependent Director service in 2023, the Committee gave particular attention to succession planning andAudit Committee Chairman for the roles of Senior Independent Director and Audit Committee Chairman. succession planning Changes to Board and Committee composition announced on 21 June 2023 will see Rachel Downey succeed Diana Brightmore-Armour as Senior Independent Director and Andy Kemp succeed Andy Myers as Chairman of the Audit Committee with effect from the conclusion of the 2023 AGM. — Stakeholder oversight and whowould be exceeding nine-years’ ## 2022/23 EVALUATION engagement; and service and consideration was given The 2022/23 Board evaluation was tofuture Board and Committees’ conducted earlier this year. Details of — Approach to diversity and composition, having regard to best the process, focus and resulting goals inclusion,and people matters. corporate governance practice. are set out below: 2022/23 outcome Recognising that a number of Process Feedback demonstrated confidence Directors had served for less than — The internal Board evaluation for inthe overall performance and three years, the benefit of tailored 2022/23 was conducted by the effectiveness of the Board, executive knowledge sharing outside of formal Company Secretary through private management and the business during Board reporting was identified. discussions with each Director. the period to 30 April 2023. Directors were positive about the — All participants have embraced Directors acknowledged the performance of the Board Committees, theexercise, making themselves significant contributions of Glyn recognising that each Committee had available, preparing for and Barker, as outgoing Chairman, during performed strongly in its own area of engaging in theconversations. the prior period of Board transition responsibility during the year. and of Michael Dobson, as new — Interviews of up to one hour were Chairman, in respect of changes Goals for 2022/23 held with each participant. The introduced during the year. — Review Board and Committees’ conversations were searching, composition to address independence free-flowing and covered a wide The introduction of renewed focus in considerations in respect of long- range of topics. key areas through a series of deep serving tenure; dives was greatly welcomed and The 2022/2023 Board evaluation Directors were appreciative of the — Consider fresh perspective to focused on the following areas: depth of debate these enabled, in Non-executive Director training — Board role, performance particular on strategy, purpose, andknowledge sharing, including andeffectiveness; visionand values. Consideration will inresponse to previous and future — Board agendas, papers, be given to future deep dives and Board and Committees’ composition; informationand minutes; other mechanisms to further enhance — Reassess Board schedule, with a Board effectiveness. — Focus, structure and frequency view to further refining approach ofBoard meetings and informal Directors were similarly appreciative toBoard priorities and key matters Board engagement; of the updates to Board reporting, for consideration; and which enabled still greater value in — Board and Committees’ composition — Further develop the Company guiding Directors’ focus at meetings and succession planning; andBoard’s approach in respect of and which provided comfort and people, succession and diversity and — Director contributions, knowledge assurance on business performance. inclusion matters, in line with 2023 exchange, development and Directors were cognisant of the Parker Review recommendations training; | | challenges to Board composition | and the FRC’s 2023 consultation | | --- | --- | --- | | — Committees’ effectiveness | presented by the extended tenure | onproposed changes to the Code. | | andperformance; | ofthree Non-executive Directors | | 125Berkeley Group 2023 Annual Report ## NOMINATION COMMITTEE REPORT CONTINUED | Diversity and Inclusion | Board sets the tone for diversity and | At 30 April 2023, female representation | | --- | --- | --- | | Berkeley strives to create a positive | inclusion across the business, Berkeley | on the Board stood at 33.33%. The | | environment for its people; one that | believes in promoting a culture of | Group meets the ethnic diversity | | fosters respect, support, wellbeing, | integrity, openness and inclusivity. | target set by the Parker Review, | | safety and inclusivity and continues | Noting the recommendations of | withone Non-executive Director | | towork towards a workplace that | theFTSE Women Leaders and the | identifying as being from an | | isrepresentative of the areas and | Parker Reviews, and the targets set | ethnicallydiverse background. | | communities in which it operates. | out in Listing Rule (LR) 9.8.6R(9), the | | In accordance with LR 9.8.6R(9), Board is committed to sustaining Berkeley is committed to equal setout below is a summary of the astrong balance of diversity, that opportunities and aims to ensure that Company’s compliance with Board reflects the diverse range of perspective, all individuals receive equal treatment, diversity targets at 30 April 2023, insight and challenge needed to enable regardless of age, disability, ethnicity, being the chosen reference date used the Board to discharge its duties and gender, sexual orientation or for the purposes of LR9.8.6R(9)(a). responsibilities effectively, and to socio-economic, educational or operate in a way that supports the professional background. continued development of a diverse Recognising the benefits and value and inclusive culture across the Group. that diversity in its broadest sense brings to the Board, and that the Targets Compliance as at 30 April 2023 At least 40% of the individuals on At the reference date, 33.33% of the individuals on the Board of Directors theBoard of Directors are women. arewomen. This figure will increase to 40% following the Board changes thatwill take effect at the conclusion of the 2023 AGM. At least one of the senior Board At the reference date, the position of Senior Independent Director is held positions (Chair, Chief Executive, byawoman, and will continue to be held by a woman following the Board Senior Independent Director, Chief changes that will take effect at the conclusion of the 2023 AGM. Financial Officer) is held by a woman. At least one individual on the The Berkeley Board currently includes one Director from a minority Boardof Directors is from a ethnicbackground. minorityethnic background.* * The following categories are used to define those from a minority ethnic background: Asian/Asian British; Black/African/Caribbean/Black British; Mixed/Multiple Ethnic Groups; other ethnic group, including Arab In accordance with LR 9.8.6R(10), as at 30 April 2023, the numerical data on the gender identity and ethnic background of the Board and Group Executive Committee, which was captured directly from the relevant individuals, is as follows: Number of Number of Number in Percentage of Board Percentage senior positions executive executive members of the Board on the board* management management Men 10 66.66% 3 7 58.33% Women 5 33.33% 1 5 41.66% Not specified/prefer not to say – – – – 0% Number of Number of Number in Percentage of Board Percentage senior positions executive executive members of the Board on the board* management management White British or other White (includingminority-white groups) 14 93.33% 4 12 100% Mixed/Multiple ethnic group – – – – 0% Asian/Asian British – – – – 0% Black/African/Caribbean/Black British 1 6.66% – – 0% Other ethnic group, including Arab – – – – 0% Not specified/prefer not to say – – – – 0% * Senior positions on Board refer to the Chair, Chief Executive, Senior Independent Director and Chief Financial Officer. 126 Berkeley Group 2023 Annual Report Berkeley continues to help lead the in respect of Berkeley’s Board of Appointments to the Board follow Strategic Report Corporate Governance Financial Statements development of diversity and inclusion Directors and Senior Management and aformal, rigorous and transparent within the construction sector, bringing the policy’s objectives, (together with process, and are made on the through a generation of talented the groupwide Equality and Diversity basisofmerit and objective criteria, women into senior positions within Policy) is available on the Company’s having due regard to the benefits thebusiness. Across both the Board website at: www.berkeleygroup.co.uk/ ofallaspects of diversity. and Executive Committee, female investors/corporate-governance. During the year, other than in respect representation in the most senior roles In accordance with the objectives of LR9.8.6R(9)(a)(iii), full compliance within the Group stands at 45.45% at ofthe Board Diversity Policy, the with which will be achieved by 30 April 2023. | | Nomination Committee regularly | 8 September 2023, the Board and its | | --- | --- | --- | | A groupwide Equality and Diversity | reviews the structure, size and | Committees have complied fully with | | Policy is in place, in line with Group | composition of the Board. When | the Board Diversity Policy. Further | | strategy, making it clear that Berkeley | reviewing the composition of, and | information on diversity and inclusion | | does not tolerate discrimination in any | succession plans for, the Board and | throughout the organisation is set out | | form. Additionally, during the year, | making recommendations to the | on page 50 of the Strategic Report. | | theCommittee approved the adoption | Board in respect of changes, the | | | of a discrete Board Diversity Policy in | Nomination Committee has due | | Michael Dobson accordance with Disclosure and regard to all aspects of diversity in Chairman, Nomination Committee Transparency Rule 7.2.8AR, which determining the appropriate balance 21 June 2023 sitsalongside the groupwide Equality of skills, experience, knowledge and and Diversity Policy. A copy of the independence to enable the Board Board Diversity Policy, which applies tocontinue to operate effectively specifically to the Board and its inthe best interests of the Company Committees (including the Nomination, for the benefit of shareholders and Remuneration and Audit Committees) wider stakeholders. and sets out the approach to diversity Residents’ facilities at King’s Park Road, Fulham 127Berkeley Group 2023 Annual Report ## AUDIT COMMITTEE REPORT Meeting items discussed ## INTRODUCTION — Financial results for the year ### The Board of Directors presents ended 30 April 2022 ### its Audit Committee Report for — KPMG’s report on the Group’s results and audit report ### the year ended 30 April 2023, — Tax report for the year ended ### which has been prepared and 30 April 2022 ### recommended by the — Risk management and internal ### AuditCommittee. control, with a focus on the viability assessment and assessment of fraud risk — Internal audit report, including June 2022 approval of the audit plan for the year ending 30 April 2023 — Auditor independence and non-audit fees and services, Andy Myers, Chairman, Audit Committee including an evaluation of theannual audit process — Review of the 2022 AnnualReport — Interim results for the six months ended 31 October 2022 — KPMG’s report on the interim The report has been prepared in review period ## FINANCIAL accordance with the requirements of — KPMG’s report on the audit ## REPORTING the Code, the Listing Rules, Disclosure planand strategy for the year — monitoring the integrity of the Guidance and Transparency Rules 7.1 ending 30 April 2023 financial statements and reporting; | and 7.2 and the FRC Guidance on | | | — Internal audit report | | --- | --- | --- | --- | | | — reviewing the application of | December 2022 | | | Board Effectiveness. | | | — Auditor independence and | significant accounting policies, non-audit fees and services Details of the composition and judgments and estimates; experience of the Committee can be — KPMG’s report on updates ## found in the Directors’ biographies RISK MANAGEMENT totheaudit strategy for the on pages 106 to 109 of this Corporate ## AND INTERNAL yearending 30 April 2023 Governance report and details of — Annual formal review of risk ## CONTROL Committee meetings are summarised management and internal — reviewing the adequacy and in the table below. control systems effectiveness of the Group’s risk — Internal audit report The Board is satisfied that the Audit management and internal — Review of the Group’s tax Committee has sufficient financial controlsystems; March 2023 strategy on behalf of the Board experience and competence. — monitoring the effectiveness of — Auditor independence and theGroup’s internal audit function; Committee purpose and non-audit fees and services responsibilities ## EXTERNAL AUDIT — Tender of the external audit The Committee has formal Terms of — overseeing the relationship with Reference which set out its role and the external auditor, including Meetings the authority delegated to it by the appointment, removal and fees; The Committee met formally three times Board. The Terms of Reference are — ensuring the external auditor’s during the year with attendance set out included on the Group’s website independence and the in the adjacent table. By invitation, the (www.berkeleygroup.co.uk/investors/ effectiveness of the audit process. external auditor, Chief Financial Officer, corporate-governance). and Head of Finance were present at all This report considers each of these The key responsibilities of the meetings, while the Chief Executive responsibilities in turn, and how the Committee centre on the Officer was present at two meetings. Committee has discharged them followingareas: The internal auditor presented at two during the year. meetings during the year. In addition, the Chairman of the Membership meetings and attendance AuditCommittee meets with the Date of appointment Meeting % of meetings ChiefFinancial Officer and has the Committee member to Committee attendance attended opportunity to meet separately with Andy Myers (Chairman)* 6 December 2013 100% the external and internal auditors, asrequired, ahead of each meeting. Rachel Downey 18 April 2018 100% The Chairman of the Audit Committee Andy Kemp 1 July 2021 100% approves any fees for additional work Sarah Sands** 16 November 2022 50% undertaken by the external auditor * Chairman of the Audit Committee since 1 September 2014 aspermitted by the Group’s policy ** Sarah Sands’ absence from one of the two meetings held since her appointment to the onnon-audit fees. Committee was due to a family bereavement 128 Berkeley Group 2023 Annual Report Management undertook an understandable and provided ## FINANCIAL assessment of these risks and theinformation necessary for ## REPORTING assumptions and reported the usersthereof to assess the Ahead of the interim and full year conclusions of these assessments, Group’sbusiness strategy results announcements, the Chief by exception, to the Committee in andfinancial performance. Financial Officer presented, and the afinancial overview paper prior to ## Committee debated, a report on the RISK MANAGEMENT the release of the Group’s interim financial results of the Group and the ## and year end results. AND INTERNAL significant financial reporting judgments ## Following review of the paper, the CONTROL and estimates relevant to the results. Committee concluded that it was The Board acknowledges that it has The Committee reviewed, prior to their satisfied that the assumptions and overall responsibility for monitoring publication, the financial disclosures in estimates adopted were appropriate. the Group’s systems of risk management the Group’s Annual Report and interim and internal control, ensuring that they Corporate GovernanceStrategic Report and year end results announcements, — Post completion comply with the Code and the FRC’s as well as the contents of trading developmentprovisions Guidance on Risk Management, updates issued during the year. The The accounting for provisions Internal Control and Related Business Committee’s review incorporated relieson management judgment Reporting, and for formally reviewing consideration of the appropriateness inestimating the quantum and their effectiveness on an annual basis. of the relevant accounting policies timing of outflows of resources tosettle any associated legal or The Group has ongoing processes and andfinancial reporting estimates constructiveobligations. procedures for identifying, evaluating andjudgments adopted therein. and managing its principal and The reports by the external auditor The Group holds provisions for post emerging risks which are embedded were taken into account in reaching completion development obligations within the ongoing business activities. itsconclusions on these matters. in respect of the construction of At operating company and divisional itsportfolio of complex mixed use level, board meetings are structured Financial Statements Key accounting matters involving developments which are expected around the key risks and opportunities management estimates that were to be incurred in the ordinary course facing each of the businesses. In considered by the Committee during of business, based on historical addition, a quarterly formal process the financial year were: experience of the Group’s sites and involves each division producing a risk — Cost of sales recognition current site-specific risks, including and control report that identify risks, The Group recognises a cost of matters relating to building fire- the potential impact of these and the saleon each unit sold and recorded safety, but which are uncertain actions being taken to mitigate them. in revenue by reference to the interms of timing and quantum. A consolidated Group Risk Management overall development margin. The The basis for determining these Report is presented at each Board development margin is an estimate provisions was presented to the meeting, which overlays wider strategic of the forecast profit percentage for Committee for its consideration. risks to those which are the focus of that development, which is often The Committee reviewed the the divisional reports. The Group completed over multiple financial relevant papers and discussed report sets out, and the Board years. Furthermore, the Group theassumptions underlying this monitors, the evolving nature of risk incurs site-wide costs. Therefore, determination with management appetite which is a key element in the recognition of cost of sales and the Group’s external auditor, determining the Group’s strategy atapoint in time is dependent on and concluded that it was satisfied andis set out on pages 86 to 87 anestimate of future selling prices that the assumptions and estimates oftheStrategic Report. anddirect costs, including an adopted were appropriate. While risk assessment and management appropriate allowance for risk, and A table of movements in provisions is carried out continuously throughout an allocation of site-wide costs. The over the year is included in note 2.16 the year and is embedded within the assessment of development margin to the Consolidated Financial Group’s procedures and debated at evolves over the life of a development Statements. each Board meeting, the Audit in line with the riskprofile. Committee ordinarily undertakes In addition, the Group’s particularly — Consideration of climate change theformal annual review on behalf complex, long-term regeneration The Committee received updates on ofthe Board which covers: developments exhibit an inherently the Group’s consideration of climate change and concluded that there — An assessment of the principal higher degree of estimation uncertainty was no material impact on the and emerging risks: and exposure to cyclical market financial reporting judgments and While the formal annual assessment movements. The Group applies an estimates in the Financial Statements is ordinarily undertaken by the Audit approach to cost of sales allocation for the year ended 30 April 2023. Committee on behalf of the Board, for these sites whereby whole-site The Group’s disclosure in this respect this year the Board dedicated a costs are accelerated to the early is set out in note 1.3 of the Annual meeting to the debate of the key stages of the development to reflect Financial Statements on page 178. principal and emerging risks facing the greater uncertainty and the the Group. evolution of risk over the life of — Review of the Annual Report suchdevelopments. | The Committee reviewed the | The Board’s assessment of risks | | --- | --- | | AnnualReport and, taking into | areset out on pages 90 to 99 of | | account the views of the external | theStrategic Report. | auditor, considered whether, taken as a whole, it was fair, balanced and 129Berkeley Group 2023 Annual Report ## AUDIT COMMITTEE REPORT CONTINUED — Assessment of the Group’s control — Viability assessment The Committee agreed with KPMG’s processes to mitigate these risks: The Committee reviewed the professional judgment that their The Group has five key components assumptions and methodology integrity and objectivity as auditor to its internal control framework and behind the Group’s viability was not compromised and, in their the Committee reviewed a paper statement, the period that the belief, that an objective, reasonable covering the assessment of controls assessment covered and the and informed third party would under each component area: sensitivity analysis undertaken. conclude that the provision of the TheCommittee was satisfied services would not impair their 1) Environment and culture; thatthe viability statement was integrity or objectivity for any 2) Controls over investment appropriate and recommended oftheimpacted financial years. decisions and delivery; itsapproval to the Board. The 3) Internal financial and In order to safeguard auditor Viability Statement can be found operationalreporting; independence, the Committee has onpage 89 of the Strategic Report. 4) Policies, procedures and apolicy on the provision of non- ITsecurity; and auditservices by the external auditor. ## EXTERNAL AUDIT 5) Monitoring and challenge. | | Audit approach | In accordance with that policy the | | --- | --- | --- | | The Committee acknowledges | KPMG presented their audit strategy | ratio of audit fees to non-audit fees | | thatinternal control procedures | to the Committee which identified | should be no greater than 0.7:1, with | | aredesigned to manage rather | their assessment of the key audit risks | atarget of lower than 0.5:1 in any | | thaneliminate risk. They can only | and other areas of audit focus, the | oneyear and in aggregate over the | | provide reasonable, and not | scope of the audit work, and included | previous three financial years. | | absolute, assurance against | updates in respect of regulatory | | The ratio for the year ended 30 April materialmisstatement or loss. changes for the current year and 2023 was 0.12:1, well within this limit. those anticipated in future years. A paper was also presented to the The non-audit fees related to: Committee which summarised the KPMG reported to the Committee — The interim review, which is closely Group’s consideration, controls and ahead of the release of the interim and related to the annual audit process; | monitoring of fraud risk across | year end results on their assessment of | | | --- | --- | --- | | itsactivities. | the Group’s accounting estimates in | — Provision of limited assurance over | | | respect of the key audit risk areas and | the Group’s scope 1, 2 and 3 carbon | — The effectiveness of internal audit: other findings arising from their work. emissions data contained within the Internal auditors are in place at a Directors report on page 159; and Group level and divisional level as The external auditor has open recourse appropriate, to provide assurance to the Non-executive Directors should — Provision of limited assurance on the onthe operation of the Group’s it consider it necessary. There is an Group’s compliance with its Green internal control framework. opportunity for private dialogue Financing Framework. between the Chairman of the Committee A report summarising the activities Audit and non-audit fee disclosures and the external auditor prior to each of the internal audit function was are set out in note 2.4 to the Committee meeting. After each meeting presented at each of the Committee Consolidated Financial Statements. there is also the opportunity for the meetings during the year. These Committee to meet with the external Any departure from this ratio will only reports covered: auditor without management present. be as a consequence of transactional — a summary of the key findings work and only where such transactional Independence of the external auditor arising from the most recent work is non-recurring. Where the As part of its audit strategy internal audits undertaken; Committee considers it is right for the presentation, KPMG identified external auditor to undertake such — management responses to thesafeguards in place within its non-recurring transactional work, controlweaknesses identified, internal processes and procedures theCommittee will ensure: theclosure of any open items toprotect, in respect of its own role, andany recurring themes; the independence of its audit. — that the nature of the work and thebasis for using the external — the outcome of other operational Nonetheless, during the year KPMG auditor shall be disclosed in the review work undertaken by the identified that certain of its non-UK Annual Report; internal audit function; and member firms had provided preparation of local GAAP financial statement — that the work does not pose — the internal audit plan for the services over the financial years ended anythreat to the independence coming year, for debate with, and 30 April 2018 through 2022 to entities andobjectivity of the external the approval of, the Committee. which were not in scope for the Group auditor; and The Committee also considered the audit, but which are prohibited by UK — that there is a presumption in internal control recommendations ethical rules. The services, which have favourof using other firms to provide raised by the Group’s external been terminated, were administrative transactional advice unless such auditor during the course of the innature and did not involve any advice can only be provided by the audit and the Group’s response management decision-making or external auditor on the grounds that: tosuch recommendations. bookkeeping. In each case the work was undertaken after the Group audit — it is proprietary to them; The Committee was satisfied that opinion was signed for the impacted the scope, extent and effectiveness — it has pre-existing knowledge financial years and had no direct or of the internal audit function was andexperience of a situation indirect effect on the Group’s appropriate for the Group during which precludes the use of Consolidated Financial Statements. the year ended 30 April 2023. alternative firms; 130 Berkeley Group 2023 Annual Report — the nature of the transaction is An assessment of the overall tender such that the Group’s auditor is process and each firm’s proposal the only practical appointment; wasmade by the Committee and and Chief Financial Officer, which was summarised in written form and — it is at the discretion of the presented to the Board. Chairman of the Audit Committee. The external audit tender resulted in There is open dialogue between the Committee’s proposal and Board’s KPMG and the Company’s senior agreement thereto that, subject to finance team to monitor any shareholder approval at the 2023 proposed new instructions. AGMon 8 September 2023, KPMG The Committee has concluded that bereappointed as the external auditor the auditor was independent during for the year ending 30 April 2024. Corporate GovernanceStrategic Report the year ended 30 April 2023. The Company confirms that it | Tender of the external audit | complied with the provisions of the | | --- | --- | | andreappointment of KPMG | Competition and Markets Authority’s | | KPMG was first appointed as the | Audit Order for the financial year | | Group’s auditor with effect from 1 May | under review. | 2014 by way of a competitive tender. As identified in the Committee’s report A Myers for the year ended 30 April 2022, a Chairman, Audit Committee tender process was conducted following 21 June 2023 the conclusion of last year’s audit, in compliance with the applicable legal and regulatory requirements, with the Financial Statements timing of the process allowing for an external auditor to be in place for the financial year ending 30 April 2024. An overview of the process is outlined below. Two audit firms were invited to tender, in addition to the incumbent auditor KPMG, who had indicated its wish to be reappointed. One of the firms declined to tender. The ensuing tender process for KPMG and a second firm encompassed: — An invitation to tender document which set out the key evaluation criteria for the selection; — A data room with sufficient information on the Group necessaryfor a detailed and considered proposal to be made; — Site visits and meetings with management of two large divisionsof the Group; — Meetings with senior Group management including personnel from the finance, tax, internal audit, legal, sustainability and IT functions; — Meetings with Executive management; and — Meetings with each member oftheAudit Committee. The tender process concluded withthe submission by each Firm of awritten tender proposal document and a presentation by each firm to the members of the Audit Committee and Chief Financial Officer. 131Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT ## ANNUAL STATEMENT OF THE CHAIRMAN ## OF THE REMUNERATION COMMITTEE Contents of the Directors’ ## INTRODUCTION Remuneration Report Page ### The Board of Directors presents Annual Statement of the ### its Directors’ Remuneration Chair of the Remuneration ### Committee Report for the Committee 134 ### yearended 30 April 2023. Berkeley’s Remuneration Philosophy 140 Remuneration at a Glance 141 How the Remuneration Policy operated in 2022/23 and how the Remuneration Policy will operate in 2023/24 142 Employment at Berkeley 145 Andy Kemp, Chairman, Remuneration Committee Annual Report on Remuneration 151 Key responsibilities of the Committee — Ensure that the contractual terms Key responsibilities include: on termination, and any payments made, are fair to the individual — Determine and agree with andthe Company and that failure theBoard the broad policy for is notrewarded. theremuneration of the Group — Note annually the remuneration Chairman, Executive Directors trends and any major changes andsenior management. inemployee benefit structures — Review pay policies for the across the Company or Group. widerworkforce. | — Determine performance conditions | The Committee’s Terms of | | --- | --- | | for the incentive plans operated | Referencesets out its full remit | | bythe Company and approve | andcan be downloaded from | | thetotal annual payments made | thesection dealingwith Investor | | under them. | Relations ontheBerkeley website | | — Determine all share incentive | (www.berkeleygroup.co.uk). | | plansfor approval by the Board | Thesewere updated in June 2021. | andshareholders. — Take into account the views ofshareholders and the wider workforce when determining plans under the Remuneration Policy. Remuneration Committee membership Date of appointment Meeting % of meetings Committee member to Committee attendance attended Andy Kemp, Chairman 1 July 2021 100% | Andy Myers 1 May 2014 | 83% | | | --- | --- | --- | | Michael Dobson 6 September 2022 | | 100% | | Natasha Adams 6 September 2022 | | 100% | | Glyn Barker* 13 June 2012 | 100% | | * Glyn Barker stepped down from the Board and from his role on the Remuneration Committee on 6 September 2022. 132 Berkeley Group 2023 Annual Report # Financial highlights of 2022/23 The Company has had another strong year reflected in the following components of performance: - Net cash of £410 million (2022: £269 million) - Pre-tax return on shareholders' equity of 18.7% (2022: 17.5%) - Net asset value per share increased by 10% to £31.01 (2022: £28.18) - Cash due on forward sales of £2.1 billion (2022: £2.2 billion) - Future anticipated gross margin in the land bank of £7.6 billion (2022: £8.3 billion) - Profit before tax of £604.0 million (2022: £551.5 million) # ESG highlights - Approximately £560 million of subsidies provided to deliver affordable housing and committed to wider community and infrastructure benefits in the year - 86% of homes delivered and 86% of land holdings on brownfield land - Met the Group's science-based target for a reduction of 50% in scopes 1 and 2 GHG emissions well ahead of 2030 target - Since 2017/18, all new applications have committed to biodiversity net gain, in total 54 developments, which together will create more than 550 acres of new or measurably improved natural habitats - 23 embodied carbon assessments completed as progress our 1.5 degree aligned Climate Action programme - Rated "A-" by COP for climate action and transparency and AAA rated in the MSCI global ESG index - 230 apprentices and graduates in direct employment during the year, with 10% of employees in 'earn and learn' positions - Industry leading Net Promoter Score (+79.2) and customer satisfaction ratings maintained - Industry leading Health and Safety performance (AIIR 79) - Over £3 million given by the Berkeley Foundation last year to its charity partners through grants and staff fundraising, with over 55% of staff involved with the work of the Foundation # 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: | | 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18 Restated | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 10 year average | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Berkeley | 27.5% | 35.1% | 30.8% | 41.1% | 41.9% | 27.9% | 16.6% | 16.5% | 17.5% | 18.7% | 27.4% | | Sector highest | 27.5% | 35.1% | 30.8% | 41.1% | 41.9% | 34.1% | 32.3% | 23.1% | 27.1% | 20.7% | 27.4% | | Sector lowest | 3.5% | 12.2% | 16.0% | 15.7% | 11.0% | 15.9% | 15.0% | 5.7% | 13.9% | 8.8% | 12.9% | | Sector average* (excluding Berkeley) | 11.4% | 18.2% | 22.3% | 24.2% | 23.3% | 24.9% | 23.8% | 10.5% | 17.7% | 13.7% | 19.0% | * 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. # 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 2022, following the satisfaction of the performance conditions, including the return to shareholders of £282.2 million in respect of the year to that date. Under the Policy approved in 2022, there continues to be no Annual Bonus Plan for the Executive Directors. # Governance The key governance highlights for the year were as follows: - The Committee consulted with the Company's largest shareholders to put in place a new Remuneration Policy at the 2022 AGM. - The Committee responded to feedback received from shareholders by amending the change of control provisions for long-term remuneration. - Appointment of two new members to the Remuneration Committee. - Approval of the Investment Association statement six months after the 2022 AGM. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 133 # DIRECTORS' REMUNERATION REPORT CONTINUED ## ANNUAL STATEMENT OF THE CHAIRMAN ## OF THE REMUNERATION COMMITTEE ### Decisions made during the year The Committee determined the following during the year: - Significant work to finalise the Directors' Remuneration Policy for approval at the 2022 AGM, including an extensive multi-phase consultation with shareholders, during which the Committee responded to feedback on the proposals and committed to amend change of control provisions for the new plans. - Consideration of and approval of vesting of the 2011 LTIP tranche in September 2022, including consideration of the extent to which financial and individual performance conditions were met. - Adoption of new plan rules and granting of awards to Executive Directors under the Restricted Share Plan (RSP) and to Executive Directors and over 55 senior employees under the Long Term Option Plan (LTOP). - Determination of salary increases for Executive Directors of 3% for 2022/23, below the average workforce increases of 6.2%. - Determination of the annual fees for Michael Dobson on his appointment as Non-executive Chairman. ### 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 163 to 173 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. ### 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. Fees of £103,200 (2022: £92,000) were provided to PwC during the year in respect of advice to the Committee on directors' remuneration. The Committee is comfortable that the members of the PwC team who provide remuneration advice have no connections with the Company or its Directors that may impair their independence. ### Dear Shareholder, I am pleased to introduce our Directors' Remuneration Report for the year ended 30 April 2023. 2022/23 has been another 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. In this letter I have set out further detail on the work of the Committee. As set out elsewhere in this Annual Report and summarised on page 133, Berkeley has performed well this year, delivering its profit guidance provided at the start of the financial year, maintaining its shareholder returns programme and increasing its net cash position, while also delivering on its Our Vision 2030 ESG commitments and demonstrating positive outcomes for all our stakeholders. All this in a year which saw continued volatility in global markets, including a sharp rise in interest rates in September and stubbornly high inflation. At a time when our colleagues, customers and communities continue to be faced with ongoing volatility in the domestic and international economy and political landscape, the business is well placed to continue serving all our stakeholders in the years to come. Our remuneration principles, which cascade throughout the business, underpin our Remuneration Policy (the "2022 Policy") and can be found on page 140. The Remuneration Committee is committed to ensuring that remuneration structure and outcomes reflect these principles. The 2022 Directors' Remuneration Policy is set out on pages 18 to 28 of the 2022 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. ### Review of Remuneration Policy The following diagrams show a summary of the remuneration structure under the 2022 Directors' Remuneration Policy and how the remuneration elements have been designed to be aligned with the Our Vision 2030 priorities: 134 Berkeley Group 2023 Annual Report Summary of the revised Remuneration Policy Long-Term Vesting period Released awards Option Plan (LTOP) Vesting period Released awards Vesting period Released awards Vesting period Released awards | | Vesting period | | Vested | Released | 1 year | | | --- | --- | --- | --- | --- | --- | --- | | | | | options | awards | holding period | Corporate GovernanceStrategic Report | | Restricted | | Vesting period Released | | | | | Share Plan (RSP) Vesting period Released Vesting period Released Sep of Year 2023 2024 2025 2026 2027 2028 2029 2030 Summary of operation: — Annual grants of Restricted Shares made following the September 2022 AGM with vesting after 4 years (plus one year Financial Statements holding period). Subject to Return on Equity and strategic underpins. — One-off award under Long-Term Option Plan granted following the September 2022 AGM subject to exercise price atthe higher of the share price at grant and £48.50, with vesting in annual tranches (released no earlier than 5 years from grant). — Remaining legacy 2011 LTIP awards continue to vest as normal subject to targets. ### Our Vision 2030 Priorities | | How we work | | | | What we create | | | --- | --- | --- | --- | --- | --- | --- | | Employee experience | | Future skills | | Customers | | Climate action | | — Health & Safety | | | — Evolving industry image | — Experience | | — Science-based Targets | | — Diversity & Inclusion | | | — Early careers and | — Digitalisation | | — Low carbon homes | | — Wellbeing and engagement | | | employeeskills | | | andoperations | | | | | | Quality | | — Net zero carbon by 2040 | | Modernised production | | Supply chain | | — Quality and safe homes | | | | — Advanced manufacturing | | | — Collaboration | | | Nature | | — Modern construction | | | — Materials strategy | Communities | | — Overall environmental | | — Use of digital technology | | | — CIPS certification | — 90% of homes on | | netgain by 2030 | brownfieldland Shared value — Connectivity, social value — Sustainable returns and community plans — Value to society — The Berkeley Foundation ### Remuneration link | Base salary, benefits and pension | | Restricted shares | | Option award | | | --- | --- | --- | --- | --- | --- | | | — Modest fixed pay keeps costs low | | — Alignment with longer term | | — Progress against the Our Vision 2030 | | | withupside for achievement against | | shareholdervalue | | reflected in ability to pay distributions | | | thepriorities through variable pay | | — Strategic underpin tests progress | | and grow share price | | | | | against the priorities of the Our Vision | | — Vesting over 2026 to 2030 aligns | | No bonus opportunity | | | 2030 on aspects such as Climate action | | rewardto management with realisation | | | — Not aligned with operation of and | | andCustomers | | of the Vision | | | measurement of long-term Vision | | — Rolling RoE underpin measured over | | — Level of potential upside reflects stretch | | | | | 4years tests sustainability of returns for | | in the priorities across the Vision | investors per the Shared value priority — Together with fixed pay, provides below Shareholding requirements market median remuneration to the — Enhanced to further align Executive extent that returns to shareholders are Directors with shareholder value per median (and hence the option award theShared value priority does not deliver significant value) 135Berkeley Group 2023 Annual Report # DIRECTORS' REMUNERATION REPORT CONTINUED ## ANNUAL STATEMENT OF THE CHAIRMAN ## OF THE REMUNERATION COMMITTEE Elements of the Remuneration Policy A summary of the elements under the Remuneration Policy is provided below. Note that the Company does not operate any form of Annual Bonus Plan for the Executive Directors. | Element | Terms | | --- | --- | | Pension | — Reduced to 6% of salary from 31 December 2022 in line with the wider workforce. | | Restricted Share Plan (RSP) | — Annual restricted share awards of 175% of salary for CEO and 150% of salary for other Directors. — First awards granted during the year ended 30 April 2023 with vesting after 4 years, and with a further 1 year holding period. — Awards vest subject to a Return on Equity underpin (average 15%). — A further strategic underpin will adjust the vesting downwards by up to 20% in the event of unsatisfactory progress against strategic and ESG priorities. | | Long-Term Option Plan (LTOP) | — One-off grant during the year ended 30 April 2023 of 1,000,000 options to CEO and 350,000 options to other Executive Directors with an exercise price at the higher of the share price at grant and £48.50, the price at which shareholders transacted their shares under the B-share consolidation. — Vesting will occur in five equal tranches between September 2026 and September 2030, with a holding restriction being in place until at least 5 years from grant. — The exercise price of the options increases by £2.50 per year for vesting dates from September 2027 onwards. — Shareholder returns are deducted from the exercise price, consistent with the approach used under the previous Director's Remuneration Policy. | | Cap | — The annual total remuneration caps will be maintained at £8 million for CEO, £3.25 million for CFO and between £2.4 million and £3.25 million for other Executive Directors. | | Existing 2011 LTIP | — No new awards will be granted and there will be no change to the existing terms of these awards. — Awards continue to vest annually up to September 2025. | | Shareholding requirement | — Shareholding requirements increased from 400% of salary for the CEO and 200% of salary for other Executive Directors, to 1,000% of salary for all Executive Directors, to be achieved within a 10 year period. — An interim requirement equal to 400% of salary should be achieved within 5 years. — Post-cessation shareholding requirement maintained at 100% of actual shareholding (or requirement if lower) for 2 years post-cessation. | Shareholder consultation The Committee invited the Company's top shareholders, the IA, ISS and Glass Lewis to take part in an extensive shareholder consultation exercise in advance of tabling the Remuneration Policy to a shareholder vote. At the AGM, 60% of shareholders voted in favour of the Remuneration Policy. Of the shareholders who engaged with us on the proposals, 85% of their respective proportion of the register voted in favour. The Committee is grateful for the time and effort spent by shareholders and their representative bodies in engaging with the Company. Following the AGM, the Company continued to hold active dialogue with shareholders. In early 2023, I wrote to a number of the Company's largest shareholders who did not support the remuneration related resolutions at the 2022 AGM, to continue a dialogue and listen to their views as significant investors in Berkeley. This has resulted in various correspondence and a number of conversations with shareholders. Overall, the Company's investor base understands how the bespoke remuneration arrangements support Berkeley's unique long-term operating model. Following this engagement process, the Company released a six month update statement setting out the actions taken as set out above. The Remuneration Committee continues to be grateful for the feedback received and the two-way engagement with shareholders. 136 Berkeley Group 2023 Annual Report # **Vesting of the seventh tranche of the 2011 LTIP (30 September 2022)** This tranche of the LTIP was the third to be subject to the enhanced performance conditions set out on pages 112 and 113 of the 2020 Report and Accounts. The following table sets these out split between Return Targets and Financial Targets: | 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. | | | --- | --- | --- | | Performance Condition | Detail | Actual Performance | | Base Return | Target returns in respect of the 12 months to 30 September 2022: £282 million (approximately). Cumulative return target since 2011: £1,679.1 million. | Actual returns made in respect of the 12 months to 30 September 2022: £282.2 million. Actual cumulative return since 2011: £1,679.1 million. | | Enhanced Return | Enhanced return: £455m million (approximately). The Enhanced Return performance condition will be satisfied provided that one or more of the following conditions are met at the September 2022 vesting date: 1. The Enhanced Return has been made; 2. Additional investment in land interests have been made, equivalent in value to the Enhanced Return, above the cost of the replacement of land that has been used in the Profit & Loss Account. 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). | Enhanced returns: £455 million. The first half of the enhanced return (£228 million) was made in September 2021 and the Company held net cash at 30 September 2021 significantly in excess of the remaining Enhanced Return due of £227 million. The second half of the Enhanced Return was satisfied in March 2022 by the £413 million acquisition of National Grid's 50% interest in Berkeley's St William joint venture, representing additional investments in land interests. This was delivered over one year ahead of the required date of 30 April 2023. | | Vesting | 50% of the 2011 LTIP tranche will be capable of vesting at the 2022 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 due to vest at 30 September 2022 will lapse. | This element of the award vested in full on September 2022. | | Financial Targets | Provided the return performance conditions have been satisfied 50% of this tranche under the 2011 LTIP is subject to the satisfaction of the following additional performance conditions. | | | Performance Condition | Detail | Actual Performance | | Cumulative ROE | 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). | Actual cumulative ROE 17.2%. 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 £551.5 million for the year ended 30 April 2022. Full vesting of the 20% of the tranche subject to this performance condition. | | | **Vesting of the 2011 LTIP tranche on 30 September 2022** | **100%** | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 137 ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## ANNUAL STATEMENT OF THE CHAIRMAN ## OF THE REMUNERATION COMMITTEE As detailed on page 128 of the 2021 Report and Accounts, the tranches of the 2011 LTIP which vest from 2021 onwards are subject to additional performance conditions based on the individual performance of the Executive Directors. The Committee assessed the individual contribution of the Executive Directors and determined that no adjustment to the formulaic outcome, as detailed in the table above, was appropriate. The seventh 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: Maximum | | | | | | | | | number of | | | | Actual | | | | | Number of | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | Options in | | Net Total | | | banked | | number of | | | | | | | options | | | | | | | | Cumulative | | | each annual | Remuneration | | | | options | | | options | | Performance | | vested after | | | | Value of gain | | | | | | | banked | | tranche for | | Cap after | | capable of | | | capable of | | | measure and | | performance | | | | | on options | | | | | | | 1 | | 2 | | 3 | | | 4 | | | 5 | | | | | | | | | | 6 | | | options b/f | | 2022 to 2025 | | | fixed pay | | | vesting | | | vesting | | | outcome | | | | test | | | vested | | | R C Perrins 2,363,617 590,904 7,323,400 276,490 276,490 See above | | | | | | | | | | | | | | | | | | 276,490 7,323,400 | | | | | | for R J Stearn 269,212 67,303 2,796,400 105,576 67,303 67,303 1,782,655 performance K Whiteman 298,383 74,596 2,814,320 106,253 74,596 74,596 1,975,824 measures. Vesting P Vallone 247,516 61,879 1,964,320 74,162 61,879 61,879 1,638,989 outcome J Tibaldi 247,516 61,879 1,964,320 74,162 61,879 61,879 1,638,989 – 100% Notes 1. This is the total banked shares for all years up to 30 September 2021. 2. The banked options at 30 September 2021 vest in four equal tranches from September 2022 to September 2025, subject to the application of the LTIP cap at each vesting. 3. The LTIP Cap continues to limit the LTIP vesting at each vesting date. The LTIP Cap operated for the 2022/23 financial year and where theLTIP value would have been greater without the Cap based on the cumulative banked options vesting in four equal tranches, it is the capped amount which is payable and therefore disclosed in the single figure of remuneration. 4. This is the maximum number of options that could have vested up to the LTIP cap. 5. This is the maximum number of options that vested, being the lesser of (2) and (4) 6. This is the value of the options that vested, calculated using the opening share price of £31.79 on 30 September 2022 (the date the options vested and became exercisable) less the exercise price of £5.3030 per share. The Committee did not adjust the level of option vesting as a result of share price growth over the performance period. It isan inherent feature of the 2011 LTIP that management and shareholders’ interests are 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. 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 The RSP has a combined vesting and holding period of 5 years and the LTOP dateof grant and realisation has a vesting period of between 4 and 8 years, with a minimum holding period forequity incentives from 5 years from grant. Phased release of equity awards The RSP ensures the phased release of equity awards through annual rolling vesting. Discretion to override The Remuneration Policy contains the ability to override formulaic outcomes formulaicoutcomes and apply discretion where deemed necessary. Post-cessation We have a two year post-cessation shareholding requirement. shareholdingrequirement Pension alignment We have lowered pension entitlement for Executive Directors to 6%, to be in line with eligibility for the majority of the wider workforce, thereby ensuring compliance with Provision 38 of the Code. Extended malus and clawback The current malus and clawback provisions already exceed the best practice suggested in relation to the Code. 138 Berkeley Group 2023 Annual Report ### Shareholder support The results of the shareholder votes on the 2022 Remuneration Policy and 2022 Annual Report on Remuneration at the 2022 AGM are set out below. #### 2022 Annual Report on Remuneration 2022 Remuneration Policy ![img-12.jpeg](img-12.jpeg) The Committee carefully considered the results of the shareholder vote on the resolution to approve the revised Directors' Remuneration Policy at the 2022 AGM. As detailed in the six month update provided by the Company following the AGM, the Committee continued an active dialogue with investors, and I wrote to the largest shareholders in early 2023. This has led to various correspondence and a number of conversations with investors. Overall, the Company's investor base understands how the bespoke remuneration arrangements support Berkeley's unique long-term operating model. Shareholders were further appreciative of the introduction of ESG underpins into the incentive framework to align with the Company's Our Vision 2030 strategy, the normalisation of pension contributions and increased shareholding requirements. However, while some shareholders and proxy advisers prefer an approach incorporating a more market familiar performance share plan, the Board is confident that a remuneration policy linked to long-term shareholder returns with no short-term cash incentive element is the most appropriate for the Group's long-term operating strategy. ### 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 2022/23 are appropriate, I would like to thank shareholders for their engagement during the year, and I welcome any comments you may have on this report. **Andy Kemp** Chairman of Remuneration Committee 21 June 2023 Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 139 # DIRECTORS' REMUNERATION REPORT CONTINUED ### Our remuneration philosophy We have developed a clear set of principles which embed our strategy into how we deliver remuneration to our Executive Directors. | Remuneration principle | Details | | --- | --- | | **Fixed pay should be aligned to the market and the individual's experience.** | The Committee sets salaries for the Executive Directors based on their experience, role, individual and corporate performance. Salaries on appointment to the Board may be set below that of the comparator group and subsequently, based on appropriate levels of individual and corporate performance, may be increased with experience gained over time. | | **Variable pay should be linked to the long-term performance of the Company.** | The Committee believes that shareholders' interests are best served by remuneration packages that have a large emphasis on performance-related pay which encourage the Executive Directors to focus on delivering the business strategy. | | **Executives should be rewarded for long-term sustainable performance.** | Our Remuneration Policy delivers all variable pay in the form of long-term incentives. The long-term incentives, which now extend to 2030, 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. | | **Executives should hold substantial equity holdings.** | In order to align the interests of Executive Directors and shareholders, the reward strategy is designed so that, provided performance is delivered, the Executive team become material (in relation to their overall compensation) shareholders in the Company. We have a two year post-cessation holding period to align with best practice. | | **Executive remuneration should not be excessive.** | 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 total 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. ![img-13.jpeg](img-13.jpeg) 140 Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## REMUNERATION AT A GLANCE What we paid Executive Directors in the year Total remuneration | Executive | | | | | Annual | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Director | Salary | Pension | | | bonus | | | | | | | | Benefits | | Total | Total | | | | | | 1 | | 2 | | 3 | | 4 | | 5 | | 6 | | | | £’000 | 2023 | | 2023 | | 2023 | | LTIP | | Cap | | Actual | | 2023 | | 2023 | 2022 | R C Perrins 597 80 – 7,323 8,000 8,000 43 8,043 8,043 R J Stearn 405 49 – 1,782 3,250 2,236 23 2,259 3,273 K Whiteman 389 47 – 1,976 3,250 2,412 27 2,439 3,282 J Tibaldi 389 47 – 1,639 2,400 2,075 14 2,089 2,414 P Vallone 389 47 – 1,639 2,400 2,075 14 2,089 2,414 Corporate GovernanceStrategic Report Notes 1. P Vallone is a member of a defined contribution scheme and received an element of his pension entitlement 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 2023, who instead received payments in lieu of a pension contribution from the Company. For the period to 31 December 2022, the Executive Directors received pension entitlements of 15% of salary, with the exception of R Perrins who received entitlements of 17% of salary. From 31 December 2022 onwards, the pension entitlements for the Executive Directors were reduced to 6% of salary in line with the wider workforce. 2. The Company does not operate a Bonus Plan for Executive Directors. 3. This represents the seventh tranche of the 2011 LTIP that vested on 30 September 2022 at a share price of £31.79 subject to the operation of the Total Remuneration Cap (see table on page 152 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. 5. The Total Remuneration Cap operated for the 2022/23 financial year and where the remuneration would have been greater without the Financial Statements Cap, it is the capped amount which is payable and therefore disclosed in the single figure of remuneration. 6. Benefits, which are not included in calculating the Remuneration Cap, include a fully expensed company car or cash allowance alternative and medical insurance. The following table sets out the total fixed pay and total variable pay in 2022/23 and 2021/22: Total Fixed Total Variable £’000 2023 2022 2023 2022 R C Perrins 720 721 7,323 7,322 R J Stearn 477 475 1,782 2,798 K Whiteman 463 466 1,976 2,816 J Tibaldi 450 448 1,639 1,966 P Vallone 450 448 1,639 1,966 Annual Bonus In line with the Remuneration Policy, the Company does not operate a bonus plan for the Executive Directors of the Company. 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 on pages 154 to 155. Interim shareholding requirement Full shareholding requirement Value of beneficially £’000 (tobemet within 5 years of 2022 AGM) (tobemetwithin 10 years of 2022 AGM) ownedshares R C Perrins 400% 1000% 9,403% R J Stearn 400% 1000% 2,418% K Whiteman 400% 1000% 3,907% J Tibaldi 400% 1000% 1,088% P Vallone 400% 1000% 1,133% All Executive Directors exceeded the shareholding requirement at the year end. 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 element of the Company’s Remuneration Policy. 141Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## HOW THE REMUNERATION POLICY WAS OPERATED IN 2022/23 ## ANDHOW IT WILL BE OPERATED IN 2023/24 | Element and key features of | How the Remuneration Policy | How we plan to implement the | | --- | --- | --- | | currentRemuneration Policy | wasimplemented in 2022/23 | Remuneration Policy in 2023/24 | | Base salary | The salaries for 2022/23 are | Base salary levels for 2023/24 | | Set on appointment and reviewed | setoutbelow: | willbeas follows: | annually (effective from 1 May each £’000s % Increase £’000s % Increase year) or when there is a change in R C Perrins 597.0 3.0% R C Perrins 597.0 – position or responsibility. R J Stearn 405.0 3.0% R J Stearn 405.0 – Determined taking into account a | number of external and internal factors. | K Whiteman 389.0 3.0% | K Whiteman 389.0 – | | --- | --- | --- | | | J Tibaldi 389.0 3.0% | J Tibaldi 389.0 – | | | P Vallone 389.0 3.0% | P Vallone 389.0 – | | | In reviewing the salaries of the | In reviewing the salaries of the | | | Executive Directors for 2022/23 and | Executive Directors for 2023/24, | | | inorder to manage the fixed cost | theCommittee took account of the | | | base, the Committee consciously set | employment conditions and salary | | | these below the increases awarded | increases awarded to employees | | | toemployees throughout the Group, | throughout the Group, which were | | | which were on average 6.2%. | onaverage 3.8%. | | Benefits | Normal company benefit provision. Normal company benefit provision. | | Benefits include a fully expensed caror car allowance alternative, andmedical insurance. Additional benefits may be offered such as relocation allowances onrecruitment. | Pension | The pension contributions as a | The pension contributions as a | | --- | --- | --- | | The company provides either | percentage of salary for 2022/23 | percentage of salary for 2023/24 | | acontribution to a pension | wereas follows: | willbe as follows. | arrangement or a payment | | | | Until 31 | | From 31 | | | % salary | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | inlieuofpension. | | December | | December | | | | | | | | | 2022 | | | 2022 | R C Perrins 6% | | | | R C Perrins 17% 6% | | | | | | R J Stearn 6% | | | | R J Stearn 15% 6% | | | | | | K Whiteman 6% | | | | K Whiteman 15% 6% | | | | | | J Tibaldi 6% | | | | J Tibaldi 15% 6% | | | | | | P Vallone 6% | | | | P Vallone 15% 6% | | | | | | The pension contributions of | | Executive Directors are aligned The committee aligned the pension withthe wider workforce. contributions of incumbent Executive Directors with the wider workforce on31 December 2022. | LTIP | The seventh vesting of options | The eighth vesting of options | | --- | --- | --- | | No new grants to be made under | underthe 2011 LTIP occurred on | underthe 2011 LTIP is due on | | thislegacy plan. | 30 September 2022. | 30 September 2023. | | LTOP | One-off grant during 2022/23 of: | N/A – one off award so no further | | A one-off grant of options, with | | awards will be made to incumbent | — 1,000,000 options to the Chief vesting in five equal tranches Executive Directors. Executive Officer; and between September 2026 and — 350,000 options to other September 2030 (i.e. between ExecutiveDirectors. 4years and 8 years from grant), withholding restriction until at No further performance conditions least5 years from grant. apply in addition to the exercise price. Exercise price operates as a ratchet mechanism whereby price increases by £2.50 per year for awards vesting from September 2027 onwards. 142 Berkeley Group 2023 Annual Report | Element and key features of | How the Remuneration Policy | How we plan to implement the | | --- | --- | --- | | currentRemuneration Policy | wasimplemented in 2022/23 | Remuneration Policy in 2023/24 | | RSP | Annual grant of nil-cost options | Annual grant anticipated to be made | | Annual grant of restricted share | madeduring 2022/23. | in line with the Remuneration Policy. | awards with vesting after 4 years 175% of salary per annum for the subject to underpin conditions, and Chief Executive Officer and 150% with a further 1 year holding period. ofsalary per annum for other ExecutiveDirectors. The vesting of awards is subject to two underpin conditions: (i) In order for any of the award Corporate GovernanceStrategic Report tovest, the average Return on Equity over the prior four years must be at least 15% (ii) Up to 20% of the award will beforfeited in the event of unsatisfactory progress against strategic and ESG priorities over the vesting period. Malus and clawback provisions apply. Total Remuneration Cap The Total Remuneration Cap for the The Total Remuneration Caps Individual caps will limit the amount Executive Directors are set out below remainunchanged. Financial Statements of total remuneration that can be (these remain the same as under the paid in respect of the financial year. previous Remuneration Policy): Total Remuneration Cap p.a. (£) R C Perrins 8,000,000 R J Stearn 3,250,000 K Whiteman 3,250,000 J Tibaldi 2,400,000 P Vallone 2,400,000 | Minimum shareholding requirement | Shareholding requirements increased | The minimum shareholding | | --- | --- | --- | | The Committee operates a system of | from 400% of salary for the CEO and | requirement remains unchanged. | | shareholding guidelines to encourage | 200% of salary for other Executive | | | long-term share ownership by the | Directors, to 1000% of salary for all | | | Executive Directors. | Executive Directors, to be achieved | | within the later of 10 years from appointment and the effective date ofthe Remuneration Policy. An interim requirement equal to 400%of salary should be achieved within the later of 5 years from appointment and the effective dateofthe Remuneration Policy. Post-cessation For two years following the cessation The post-cessation shareholding shareholdingrequirement of employment, Executive Directors requirement remains unchanged. To ensure that Executive Directors are required to hold shares to the continue to be aligned with the value of the shareholding guideline shareholders’ interests post their that applied at the cessation of cessation of employment with theiremployment; or, in cases theGroup. wherethe individual has not had sufficient time to build up shares tomeet their guideline, the actual levelof shareholding at cessation. 143Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## HOW THE REMUNERATION POLICY WAS OPERATED IN 2022/23 ## ANDHOW IT WILL BE OPERATED IN 2023/24 | Element and key features of | How the Remuneration Policy | How we plan to implement the | | --- | --- | --- | | currentRemuneration Policy | wasimplemented in 2022/23 | Remuneration Policy in 2023/24 | | NED fee policy | Non-executive Director fee levels | Non-executive Director fee | | All Non-executive Directors have | for2022/23 were increased by 3.0% | levelsfor2023/24 remain | | specific terms of engagement and | as follows: | unchangedas follows: | their remuneration is determined — Chairman: £373k; — Chairman: £400k; bythe Board within the limits set — SID fee: £88.5k; — SID fee: £88.5k; bythe Articles of Association. | | — Basic fee: £72.5k; | — Basic fee: £72.5k; | | --- | --- | --- | | Each Non-executive Director | — Additional fee for chairmanship | — Additional fee for chairmanship | | receives a fee which relates to | ofCommittee: £13k. | ofCommittee: £13k. | membership of the Board and The average employee rise in salaries The average employee rise in salaries additional fees are paid for was 6.2%. was 3.8%. Committee Chairmanship. Michael Dobson was appointed A minimum shareholding Chairman of the Board effective requirement applies for the Non- fromthe date of the 2022 AGM. Executive Directors equal to 100% Hisannual fee was set at £400,000. ofnet fees. This should be achieved within three years of appointment. Key elements of Berkeley’s Remuneration Policy for 2023/24 Policy elements Purpose 22/23 23/24 24/25 25/26 26/27 27/28 Base salary To recruit and retain Executive Directors of the appropriate calibre and experience to achieve the Company’s business strategy Benefits To provide competitive levels ofemployment benefits Pension To provide competitive levels ofpension benefits LTOP To provide an opportunity for Executive Directors to earn reward for growth in shareholder value achieved over the longer term RSP Reflects the absence of annual bonus opportunity in order to drive longer term rather than in-year performance, and together with fixed pay delivers remuneration that is aligned with market levels for market competitiveperformance Total To achieve a balance between the Remuneration need to reward and incentivise the Cap Executive Directors to implement the Company strategy and the interests of other stakeholders in the Company Shareholding To ensure that Executive Directors’ requirement interests are aligned with those ofshareholders over a longer timehorizon 144 Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## EMPLOYMENT AT BERKELEY The Remuneration Committee’s remit The Committee remit includes 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 ‘Our Vision 2030: 10 Strategic Priorities’, on pages 50 and 52, we set out howwe are working towards developing highly skilled teams that work together in a safe, healthy Corporate GovernanceStrategic Report 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 a review of key remuneration elements, policies and processes during the 2022/23 financial year, in order to ensure that wider workforce payand policies were 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: Financial Statements — Whether the element of remuneration is consistent with the Company’s Remuneration Principles; — If there are differences, are they objectively justifiable; and — Whether the approach seems 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 Base salary 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. Pension We provide either a contribution to a pension arrangement or a payment in lieu of pension. The maximum pension contribution for the wider workforce is 15% of salary; the average is 6%, the level to which pension contributions for the Executive Directors have been aligned since 31 December 2022. Benefit We offer a range of benefits to our employees, including medical insurance. Bonus 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 not eligible for annual bonuses. LTOP A number of senior individuals participate in the LTOP, on largely similar terms to those for the Executive Directors. Medium-term incentives In addition, medium-term incentive schemes are in place for all levels of staff below Executive Director level. In conducting the review process for wider workforce remuneration for the coming financial year, and recognising the ongoing cost of living pressures, the Company focused reviews on lowers salary levels and young talent, and exhibited restraint at higher salary levels. 145Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## EMPLOYMENT AT BERKELEY The Committee is satisfied that: — All employees are treated consistently and that the context and knowledge shared with the Committee is a useful underpin to ensure that the Committee’s future decision making around Executives’ and Senior Management’s pay supports fair and equal remuneration; — Salary increases for employees across the Company are being applied on an equitable basis, and that average employee increases are considered when setting pay 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 Berkeley is 36.0%. Like much of our industry, this is primarily driven by the composition of our workforce, with a lower proportion of women in senior, higher paid roles, and more women occupying junior, lower paid roles, alongside Berkeley’s strategy for procurement whereby construction labour is procured through subcontractor packages and not directly employed. The composition 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 create a positive working environment for our people; one that fosters respect, support, wellbeing, safety and inclusivity. In 2022 we further developed our action plans in support of the strategic priorities within Our Vision 2030, Berkeley’s long-term strategy. Employee experience and diversity and inclusion The first priority area is ‘Employee Experience’ which places a specific focus on several areas, including employee experience and diversity and inclusion. We are focusing on a range of actions across the business to help drive change; setting the tone from the top with strong leadership; working in partnership with external organisations; training all of our people in equity, diversity and inclusion; enhancing networking opportunities; raising awareness to all through communication on key topics and employing best practice recruitment practices. 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 are committed to creating an engaged and inclusive environment by developing guiding principles and seeking to attract and retain a diverse workforce. We have enhanced maternity and paternity policies, with the view of attracting and retaining more women, and also amore agile approach to working compared to traditional construction roles 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 to help with the progression of women within the business. 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. 74% of all hires that have 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. The health and wellbeing of our staff is also at the core of our values. All staff receive a suite of health and wellbeing benefits and those that have been in the business for two years are eligible for a free comprehensive health check that includes tests specific to female health such as breast cancer screening. 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. Throughout the individual operating companies local initiatives have been implemented to continue to improve the personal and professional development of women within the business. Included in this is the establishment of Employee Resource Networks (ERNs). Two of these groups are focused on addressing gender equality: Parents and Carers, and Women and Allies. These networks have evolved to include activities such as large-scale events bringing women together, the implementation of training and development specifically focused in areas such as imposter syndrome and public speaking, and improving resources and materials such as menopause support and women returning to work from Maternity Leave. 146 Berkeley Group 2023 Annual Report ### Future skills and long-term change Our second strategic priority focuses on 'Future Skills' looking at how we can create tangible long-term change within the industry and inspire a broad range of people to join the built environment sector. Our graduate scheme continues to target a balanced intake each year, aiming to identify the next generation of leaders within the organisation, in 2022/23 we saw 36% of positions filled by female candidates. This will naturally take a period of time but we are investing for the long-term. In line with our continued work with local communities we have completed a number of engagements with young people in schools, some of which have been designed to specifically promote careers in the built environment to young women and girls. We have a number of affiliations with companies that promote women to work in the built environment. We have enhanced a long standing relationship with Women into Construction by becoming a Platinum Member and are a founding partner for the Mayor's Fund for London Firm Foundations diversity pledge. ### Pay comparisons The following table provides the ratio of the Chief Executive to that of the median, 25th and 75th percentile total remuneration of full-time equivalent UK employees. | Year | Method | 25th percentile pay ratio | Median pay ratio | 75th percentile pay ratio | | --- | --- | --- | --- | --- | | 2022/23^{1} | Option B | 189:1 | 123:1 | 77:1 | | 2021/22^{1} | Option B | 200:1 | 109:1 | 85:1 | | 2020/21^{1} | Option B | 189:1 | 119:1 | 85:1 | | 2019/20^{1} | Option B | 189:1 | 125:1 | 84:1 | 1. CEO pay ratio is determined by reference to representative employee data as at the financial year end. The median pay ratio for 2022/23 is 123:1. The Company considers that the median pay ratio for 2022/23 is consistent with the pay, reward and progression policies for the Company's UK employees as a whole. The Committee determined that it would be appropriate to use Option B of The Companies (Miscellaneous Reporting) Regulations 2018, where the latest available gender pay gap data (i.e. from April 2023) 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. 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. 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. | | 25th percentile | Median | 75th percentile | | --- | --- | --- | --- | | Salary | 33,750 | 55,000 | 80,000 | | Total pay and benefits | 42,471 | 65,571 | 104,866 | 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. | | Chief Executive pay ratio | | --- | --- | | R J Stearn | 3.6 | | K Whiteman | 3.3 | | J Tibaldi | 3.9 | | P Vallone | 3.9 | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 147 ## DIRECTORS' REMUNERATION REPORT CONTINUED EMPLOYMENT AT BERKELEY 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 long-term incentive arrangements, 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, reflecting alignment with shareholder value. - 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 - 17:1 - To employee at the 50th percentile - 11:1 - To employee at the 75th percentile - 7:1 ### 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. ![img-14.jpeg](img-14.jpeg) 148 Berkeley Group 2023 Annual Report # 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 figure total of remuneration ($'000) | | | | --- | --- | --- | --- | | | R C Perrins Chief Executive | Annual bonus pay-out (as % maximum opportunity) | Multi-year incentive vesting awards (as % maximum opportunity) | | 2022/23 | 8,043 | - | 100% | | 2021/22 | 8,043 | - | 100% | | 2020/21 | 7,971 | - | 100% | | 2019/20 | 8,030 | - | 100% | | 2018/19 | 7,809 | 100% | 100% | | 2017/18 | 7,806 | 100% | 100% | | 2016/17 | 27,963 | 100% | 100% | | 2015/16 | 10,993 | 100% | 100% | | 2014/15 | 12,357 | 100% | 100% | | 2013/14 | 2,271 | 100% | 100% | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 149 ## DIRECTORS' REMUNERATION REPORT CONTINUED EMPLOYMENT AT BERKELEY ### Percentage change in Directors' remuneration The following table compares Directors' pay (including salary, taxable benefits and annual bonus) 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 | Base salary/fees | | | Taxable benefits | | | Annual Bonus | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | | **Executive Directors^{1}** | | | | | | | | | | | R C Perrins | 3.0% | 3.5% | 0% | 1% | 64% | -37% | n/a | n/a | n/a | | R J Stearn | 3.0% | 3.5% | 0% | 1% | 1% | 1% | n/a | n/a | n/a | | K Whiteman | 3.0% | 3.5% | 0% | -14% | 32% | -2% | n/a | n/a | n/a | | J Tibaldi | 3.0% | 3.5% | 0% | 1% | 1% | 0% | n/a | n/a | n/a | | P Vallone | 3.0% | 3.5% | 0% | 0% | -1% | -23% | n/a | n/a | n/a | | **Non-executive Directors^{2}** | | | | | | | | | | | M Dobson^{3} | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | J Armitt | 3.0% | 3.5% | 0% | n/a | n/a | n/a | n/a | n/a | n/a | | G Barker^{4} | 3.0% | 3.5% | Note 5 | n/a | n/a | n/a | n/a | n/a | n/a | | A Myers | 3.1% | 3.5% | 0% | n/a | n/a | n/a | n/a | n/a | n/a | | D Brightmore-Armour | 3.0% | 3.5% | Note 6 | n/a | n/a | n/a | n/a | n/a | n/a | | R Downey | 3.1% | 3.5% | 0% | n/a | n/a | n/a | n/a | n/a | n/a | | E Adekunle | 3.1% | 3.5% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | W Jackson | 3.1% | 3.5% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | S Sands | 3.1% | 3.5% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | A Kemp | 3.1% | 3.5% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | N Adams | 3.1% | 3.5% | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | Average percentage increase for employees^{13} | 6.2% | 5.3% | 0.2% | 5% | 4% | 4% | 2% | 5% | 7% | Notes 1. Executive Director salaries were reduced by 20% between 1 April and 30 September 2020. 2. Non-executive Director fees were reduced by 20% between 1 April and 30 September 2020. 3. M Dobson was appointed to the Board on 8 June 2022. 4. G Barker stepped down from the Board on 6 September 2022 and the figure is based on FTE fees. 5. On appointment as Group Chairman on 26 June 2020, G Barker's fee increased from £123.3k to £350k per annum. 6. On appointment as Senior Independent Director on 23 July 2020 D Brightmore-Armour's fee increased from £68k to £83k per annum. 7. 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). 8. Employee salaries were reduced between 1 April and 31 July 2020 on a sliding scale dependent on salary levels. 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. 150 Berkeley Group 2023 Annual 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 AGM on 6 September 2022, was implemented for Executive Directors during the financial year thatended on 30 April 2023. 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 2022/23 financial year. The components of the single figure for 2022/23 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, re-approved at the 2019 and 2022 AGM. Total remuneration | | | | | Annual | | | Total | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Executive Director | Salary | Pension | | bonus | Benefits | | fixed | variable | | Total | | £’000 | 2023 | | 2023 | 2023¹ LTIP ² Cap³ Actual⁴ | | 2023⁵ | 2023 | | 2023 | 2023 | Corporate GovernanceStrategic Report R C Perrins 597 80 – 7,323 8,000 8,000 43 720 7,323 8,043 R J Stearn 405 49 – 1,782 3,250 2,236 23 477 1,782 2,259 K Whiteman 389 47 – 1,976 3,250 2,412 27 463 1,976 2,439 J Tibaldi 389 47 – 1,639 2,400 2,075 14 450 1,639 2,089 P Vallone 389 47 – 1,639 2,400 2,075 14 450 1,639 2,089 Notes 1. The Company does not operate a Bonus Plan for Executive Directors. 2. This represents the seventh tranche of the 2011 LTIP that vested on 30 September 2022 at a share price of £31.79 subject to the operation of the Total Remuneration Cap (see table on page 152 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 Financial Statements 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 2022/23 financial year and where the remuneration would have been greater without the Cap, it is the capped amount which is payable and therefore disclosed in the single figure of remuneration. 5. Benefits, which are not included in calculating the Remuneration Cap, include a fully expensed company car or cash allowance alternative and medical insurance. Comparative figures for 2021/22, as disclosed in last year’s Directors’ Remuneration Report, are set out in the table below. Total remuneration | | | | | Annual | | | Total | | Total | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Executive Director | Salary | Pension | | bonus | Benefits | | fixed | variable | | Total | | £’000 | 2022 | | 2022 | 2022¹ LTI P² Cap³ Actual⁴ | | 2022⁵ | 2022 | | 2022 | 2022 | R C Perrins 580 98 – 7,322 8,000 8,000 43 721 7,332 8,043 R J Stearn 393 59 – 2,798 3,250 3,250 23 475 2,798 3,273 K Whiteman 378 56 – 2,816 3,250 3,250 32 466 2,816 3,282 J Tibaldi 378 56 – 1,966 2,400 2,400 14 448 1,966 2,414 P Vallone 378 56 – 1,966 2,400 2,400 14 448 1,966 2,414 Notes 1. The Company does not operate a Bonus Plan for Executive Directors. 2. This represents the sixth tranche of the 2011 LTIP that vested on 30 September 2021 at a share price of £43.46 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. 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 2021/22 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. 151Berkeley Group 2023 Annual Report ## DIRECTORS’ REMUNERATION REPORT CONTINUED ## ANNUAL REPORT ON REMUNERATION 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. 1 Basic fees Additional fees Total fees Non-executive Director £’000 2023 2022 2023 2022 2023 2022 2 M Dobson 359.5 – – – 359.5 – 3 J Armitt 87.8 85.3 – – 87.8 85.3 4 G Barker 130.1 362.4 – – 130.1 362.3 A Myers 72.5 70.4 13.0 13.0 85.5 83.4 D Brightmore-Armour 88.5 85.9 – – 88.5 85.9 R Downey 72.5 70.4 – – 72.5 70.4 E Adekunle 72.5 70.4 – – 72.5 70.4 W Jackson 72.5 70.4 – – 72.5 70.4 S Sands 72.5 70.4 – – 72.5 70.4 5 A Kemp 72.5 58.6 13.0 5.4 85.5 64.0 6 N Adams 72.5 17.6 – – 72.5 17.6 Notes 1. Additional fees represent fees paid for the role of Committee Chairmanship. 2. M Dobson was appointed to the Board on 8 June 2022 and to the role of Chairman on 6 September 2022. 3. J Armitt receives a base fee of £87,800 to reflect his experience and pre-eminent standing in construction and infrastructure, and the value he continues to add to the Board. 4. G Barker stepped down from the Board on 6 September 2022. 5. A Kemp was appointed to the Board on 1 July 2021 and to the role of Remuneration Committee Chair on 6 December 2021. 6. N Adams was appointed to the Board on 1 February 2022. Long-term incentives (Audited) The seventh vesting of options under the 2011 LTIP occurred on 30 September 2022, subject to the performance conditions set out on page 137. These performance conditions were 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. Maximum | | | | | Options in | | | | | number of | | | | Actual | | | | | | Number | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | each annual | | | | Net Total | | | banked | | number of | | | Performance | | | of options | | | Value of | | | | | | Cumulative | | | tranche for | | Remuneration | | | | options | | | option | | | measure | | vested after | | | gain on | Cumulative | | | | | | banked | | | 2022 to | | Cap after | | capable of | | | capable of | | | | | and | performance | | | options | | banked | | | | | | 1 | | | 2 | | 3 | | | 4 | | | 5 | | | | | | | | 6 | | 7 | | | options b/f | | | | 2025 | | fixed pay | | | vesting | | | vesting | | | outcome | | | | test | vested | options c/f | | | | R C Perrins 2,363,617 590,904 7,323,400 276,490 276,490 See page 137 | | | | | | | | | | | | | | | | | | | 276,490 7,323,400 2,087,127 | | | | | | for R J Stearn 269,212 67,303 2,796,400 105,576 67,303 67,303 1,782,655 201,909 performance K Whiteman 298,383 74,596 2,814,320 106,253 74,596 74,596 1,975,824 223,787 measures. Vesting P Vallone 247,516 61,879 1,964,320 74,162 61,879 61,879 1,638,989 185,637 outcome J Tibaldi 247,516 61,879 1,964,320 74,162 61,879 61,879 1,638,989 – 100% 185,637 Notes 1. This is the total banked shares for all years up to 30 September 2021. 2. The banked options at 30 September 2021 vest in four equal tranches from September 2022 to September 2025, subject to the application of the LTIP cap at each vesting. 3. The LTIP Cap continues to limit the LTIP vesting at each vesting date. The LTIP Cap operated for the 2022/23 financial year and where theLTIP value would have been greater without the Cap based on the cumulative banked options vesting in four equal tranches, it is the capped amount which is payable and therefore disclosed in the single figure of remuneration. 4. This is the maximum number of options that could have vested up to the LTIP cap. 5. This is the maximum number of options that vested, being the lesser of (2) and (4) 6. This is the value of the options that vested, calculated using the opening share price of £31.79 on 30 September 2022 (the date the options vested and became exercisable) less the exercise price of £5.3030 per share. 7. These are the banked options carried forward to next year. 8. Each Executive Director exercised all the options that vested on 30 September 2022. 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. 152 Berkeley Group 2023 Annual Report The table below sets out the Long Term Option Plan (LTOP) awards granted to the Executive Directors on 9 February 2023. The awards vest in five equal tranches commencing on 30 September 2026. Type of Number of Aggregate Exercise price Vesting dates 1 | Executive Director | award | awardsgranted | | marketvalue | | ongrant | (awardsvestinequaltranches) | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | Tranche 1: | | | | Tranche 1: | | R C Perrins | | | 1,000,000 £42.81m | | | | | | | | | | | | | | £48.50 | | 30 September 2026 | | | | | | | | Tranche 2: | | | | Tranche 2: | R J Stearn 350,000 £14.98m | | | | £51.00 | 30 September 2027 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Tranche 3: | | | | Tranche 3: | | | K Whiteman 350,000 £14.98m | Option | | | | | | | | | | | £53.50 | | 2 October 2028 | | | | | | Tranche4: | | | | Tranche 4: | Corporate GovernanceStrategic Report | J Tibaldi 350,000 £14.98m £56.00 1 October 2029 Tranche 5: Tranche 5: P Vallone 350,000 £14.98m £58.50 30 September 2030 Notes 1. Based on the average closing share price of £42.81 over the three days prior to grant. The exercise price operates as a ratchet mechanism whereby price increases by £2.50 per year for awards vesting from September 2027 onwards. Dividends or other distributions to shareholders (other than in relation to share buy-backs) are deducted from the exercise price between grant and exercise. Tranches 1 and 2 are subject to a holding period beginning on the vesting date and ending 9 February 2028. Financial Statements The Company intends to manage the level of dilution arising from the LTOP awards by implementing net settling for tax and the exercise price where appropriate. The table below sets out the Restricted Share Plan (RSP) awards granted to the Executive Directors on 9 February 2023. Type of Number of Award as Aggregate 1 Executive Director award awardsgranted % of salary marketvalue Vesting date R C Perrins 24,407 175% £1,044,750 9 February 2027 R J Stearn 14,192 150% £607,500 Nil-cost K Whiteman 13,631 150% £583,500 option J Tibaldi 13,631 150% £583,500 P Vallone 13,631 150% £583,500 Notes 1. Based on the average closing share price of £42.81 over the three days prior to grant. The Awards entitle Executive Directors to acquire Shares up to the maximum number set out above, subject to continued employment and two underpins being: — the Company’s average return on equity over the four financial years commencing with the financial year ending 30 April 2023 being at least 15% on an annualised basis; and, — an additional discretionary underpin pursuant to which the Remuneration Committee of the Company may reduce the level of vesting by up to 20% to reflect what it considers to be unsatisfactory progress over the performance period against the strategic and ESG priorities set out in Our Vision 2030. The Awards are also subject to a holding period ending on 9 February 2028. Dilution A maximum of approximately 19 million shares were approved by shareholders under the 2011 LTIP. The actual number issued is significantly lower due to a combination of remuneration caps, the settlement of awards net of both the option price and participants’ tax obligations and leavers. To date, 4.0 million shares have been issued under the 2011 LTIP since 2016 and it is anticipated that, applying the same principles, a maximum of approximately 0.9 million further shares will be awarded by the scheme’s final vesting in September 2025; in total 4.3% of the company’s current issued share capital over a ten year period. Beyond September 2025, the total maximum dilution in respect of discretionary share plans over a 10 year period is anticipated to fall to around 3% based on the operation of the new plans under the Directors’ Remuneration Policy. Payments to past Directors (Audited) Sean Ellis stepped down from the Board in October 2021 but remained employed by the Company until October 2022, and received agreed final remuneration over this period totalling £4.6 million in value. No further sums are due to him. 153Berkeley Group 2023 Annual Report # DIRECTORS' REMUNERATION REPORT CONTINUED ## ANNUAL REPORT ON REMUNERATION ### 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. Using the Company's closing share price of £44.47 on 30 April 2023, compliance with the requirements was as follows: | | Obligation (% of base salary) | Actual Share-holding as a % of base salary at 30 April 2023 | Achievement at 30 April 2023 | | --- | --- | --- | --- | | **Executive Directors^{1}** | | | | | R C Perrins | 400%/1000% | 9,403% | ✓ | | R J Stearn | 400%/1000% | 2,418% | ✓ | | K Whiteman | 400%/1000% | 3,907% | ✓ | | J Tibaldi | 400%/1000% | 1,088% | ✓ | | P Vallone | 400%/1000% | 1,133% | ✓ | | **Non-executive Directors^{2}** | **Obligation (% NED net fees)** | **Actual share-holding as % of net fees at 30 April 2023** | **Achievement at 30 April 2023** | | M Dobson^{3} | 100% | 167% | ✓ | | J Armitt | 100% | 586% | ✓ | | G Barker^{4} | 100% | 224% | ✓ | | A Myers | 100% | 272% | ✓ | | D Brightmore-Armour | 100% | 84% | ✗ | | R Downey | 100% | 138% | ✓ | | E Adakunle | 100% | 128% | ✓ | | W Jackson | 100% | 3,472% | ✓ | | S Sands | 100% | 0% | ✗ | | A Kemp | 100% | 259% | ✓ | | N Adams | 100% | 225% | ✓ | Notes 1. A 1000% of salary requirement for all Executive Directors is to be achieved within the later of 10 years from appointment and the effective date of the Remuneration Policy. An interim requirement equal to 400% of salary should be achieved within the later of 5 years from appointment and the effective date of the Remuneration Policy. 2. To be achieved within three years of appointment. 3. M Dobson was appointed to the Board on 8 June 2022. 4. G Barker ceased to be a Director on 6 September 2022 and his shareholding is shown as at that date. 154 Berkeley Group 2023 Annual Report | | Beneficially | | Banked LTIP | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 | | | 2 | | 3 | | 4 | | | owned shares | | | | options | | LTOP options | | RSP awards | | Total interests held | Executive Directors R C Perrins 1,262,370 2,087,127 1,000,000 24,407 4,373,904 R J Stearn 220,222 201,909 350,000 14,192 786,323 K Whiteman 341,778 223,787 350,000 13,631 929,196 J Tibaldi 95,168 185,637 350,000 13,631 644,436 P Vallone 99,067 185,637 350,000 13,631 648,335 Non-executive Directors 5 Corporate GovernanceStrategic Report M Dobson 8,259 – – – 8,259 J Armitt 6,363 – – – 6,363 6 G Barker 12,857 – – – 12,857 A Myers 2,770 – – – 2,770 D Brightmore-Armour 923 – – – 923 R Downey 1,191 – – – 1,191 E Adekunle 1,108 – – – 1,108 W Jackson 30,000 – – – 30,000 S Sands - – – – – Financial Statements A Kemp 2,636 – – – 2,636 N Adams 1,947 – – – 1,947 Notes 1. Beneficial interests include shares held directly or indirectly by connected persons. 2. 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. 3. LTOP options vest in equal tranches subject to continued service. 4. RSP awards vest after four years subject to satisfaction of underpin conditions and continued service. 5. M Dobson was appointed to the Board on 8 June 2022. 6. G Barker stepped down from the Board on 6 September 2022 and his share interests are shown as at that date. Summary table The following table sets out where in the Remuneration Committee Report the following information can be found: Relevant in Year Page Taxable benefits (Audited) Yes 142 Total pension entitlements (Audited) Yes 142 Payments to past Directors (Audited) Yes 153 Payments for loss of office (Audited) No payments 153 Directors’ shareholding and share interests (Audited) Yes 154 to 155 Relative importance of spend on pay The table below sets out the relative importance of spend on pay in the 2021/22 and 2022/23 financial years compared with distributions to shareholders. 2022/23 2021/22 (£m) (£m) % change Remuneration of Group employees (including Directors) 255 239 7% Distributions to shareholders by way of dividends and share buy-backs 254 515 (51%) 155Berkeley Group 2023 Annual Report ## DIRECTORS' REMUNERATION REPORT CONTINUED ### ANNUAL REPORT ON REMUNERATION Details of the service contracts or letters of appointment are as follows: | | Date of contract/ letter of appointment | Expiry date | Notice period by Company or Director | | --- | --- | --- | --- | | **Executive Directors** | | | | | R C Perrins | 15 July 2002 | Rolling service contract with no fixed expiry date | 12 months | | R J Stearn | 3 October 2014 | Rolling service contract with no fixed expiry date | 12 months | | K Whiteman | 15 January 1996 | Rolling service contract with no fixed expiry date | 12 months | | J Tibaldi | 30 June 1999 | Rolling service contract with no fixed expiry date | 12 months | | P Vallone | 25 September 1990 | Rolling service contract with no fixed expiry date | 12 months | | **Non-executive Directors** | | | | | M Dobson | 8 June 2022 | Renewal annually on 1 May | n/a | | J Armitt | 1 October 2007 | Renewal annually on 1 May | n/a | | A Myers | 6 December 2013 | Renewal annually on 1 May | n/a | | D Brightmore-Armour | 1 May 2014 | Renewal annually on 1 May | n/a | | R Downey | 8 December 2017 | Renewal annually on 1 May | n/a | | E Adekunle | 5 January 2021 | Renewal annually on 1 May | n/a | | W Jackson | 5 January 2021 | Renewal annually on 1 May | n/a | | S Sands | 30 April 2021 | Renewal annually on 1 May | n/a | | A Kemp | 1 July 2021 | Renewal annually on 1 May | n/a | | N Adams | 1 February 2022 | Renewal annually on 1 May | 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. 156 Berkeley Group 2023 Annual Report ## DIRECTORS’ REPORT | The Directors submit their report | A full review of the business, its | During the year to 30 April 2023, | | --- | --- | --- | | together with the audited Consolidated | development, performance and | andin accordance with the authority | | and Company Financial Statements for | position at the year end, together with | provided by shareholders at the | | the year ended 30 April 2023. | information in respect of important | 2021and 2022 AGMs, the Company | | | events and likely future developments, | has purchased through the market | For the purpose of Disclosure as required by DTR 4.1.8R, is set out forcancellation 4,052,534 ordinary Guidance and Transparency Rule on pages 20 to 27 of the Strategic shares with a nominal value of (DTR) 4.1.8R, the Directors’ Report Report and is incorporated into this £219,408.24, which equated to isalso the Management Report for report byreference. 3.64%of the called-up share capital theyear ended 30 April 2023. ofthe Company at the beginning Financial risk management Certain information that is relevant ofthe financial year, excluding andfinancialinstruments tothis report, including information treasury shares. The aggregate The Company has not used financial | required in accordance with the | | consideration paid for these shares | | | --- | --- | --- | --- | | | instruments during the year under | | Corporate GovernanceStrategic Report | | Companies Act 2006, the Large and | | was £155.4 million. | | review. Information in respect of the Medium-sized Companies and Groups principal financial and operating risks As at 30 April 2023, the Company (Accounts and Reports) Regulations and uncertainties relating to the held 8,959,264 shares in treasury. 2008 (as amended), DTR 4.1.8R, DTR business, including the Group’s financial These shares have no voting rights. 7, Listing Rule (LR) 9.4.3R and LR 9.8R risk management objectives and Authority will be sought from can be found in the Strategic Report policies and its exposure to liquidity, shareholders at the forthcoming and the Corporate Governance foreign currency, interest rate, price AGMto renew the authority given section of this Annual Report, as andcredit risks, isset out on pages atthe 2022 AGM for a further year, detailed in each case below, and is 90to 99 of the Strategic Report and permitting the Company to purchase thereby incorporated by reference innote 2.23 ofthe Consolidated Financial its own shares in the market up to a into this report. | | Statements, and is incorporated into | limit of 10% of its issued share capital. | | | --- | --- | --- | --- | | The following information in respect | this report by reference. | | | | | | The business of the Company shall | Financial Statements | ofLR 9.8.4R can be located in the Dividends bemanaged by the Directors, who following sections: An interim dividend of 21.25 pence may exercise all the powers of the pershare was paid to shareholders Company subject to the provisions of Section in | Information | Annual Report Pages | | | on9 September 2022 and a further | the Company’s Articles of Association | | --- | --- | --- | --- | --- | --- | | | | | | interim dividend of 69.44 pence per | (the“Articles”) and statutes, and to | | Capitalised | | Directors’ | | | | | | | | | share was paid on 24 March 2023. | such directions as may be given by | | interest | | | Report 159 | | | theCompany in general meeting by Post Balance Sheet events Unaudited special resolution, provided that no There are no post Balance Sheet financial such direction or alteration of the events that require disclosure. information – N /A Articles shall invalidate any prior act Research and development ofthe Directors which would have been Long-term | | | | | | The Group is engaged in various | valid if such direction or alteration of | | --- | --- | --- | --- | --- | --- | --- | | incentive | Remuneration | | 132 to | | | | | | | | | | research and development activities, | the Articles had not been given. | | schemes | | Report | | 156 | | | including the development of modular Further details of Directors’ powers Waiver of manufacturing, which forms part of are set out in the Articles. | Directors’ | Remuneration | | 132 to | | the Group strategy and is reported | | | --- | --- | --- | --- | --- | --- | --- | | emoluments | | Report | | 156 | inOur Vision 2030. Details of these | At the Company’s 2022 AGM, | | | | | | | activities can befound in the | Directors were authorised to allot | Allotments StrategicReport on page 51. shares or grant rights to subscribe for, of equity or convert, any security into shares up securities – N /A Share capital toan aggregate nominal amount of As at 30 April 2023, the Company had Contracts of Directors’ £1,989,322.13 and to allot shares for 116,537,358 ordinary shares of 5.4141 significance Report 161 asimilar aggregate nominal amount pence eachinissue (2022: 120,589,892 for the purposes of a rights issue. Controlling ordinary shares of 5.4141 pence each), shareholders – N/A which are fully paid. 158 Dividend Directors’ (i.e. waivers Report EBT) The Corporate Governance section onpages 102 to 156 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 102, 117 and138 of this Report. 157Berkeley Group 2023 Annual Report ## DIRECTORS’ REPORT CONTINUED | The Directors were further authorised | Directors | There were no contracts of significance | | --- | --- | --- | | to disapply statutory pre-emption | The Directors of the Company, their | during, or at the end of, the financial | | rights in connection with certain | profiles and details of their roles and the | year in which a Director of the Company | | allotments of shares. These authorities | Committees of which they are members | is, or was, materially interested, other | | will apply until the conclusion of the | are detailed on pages 106 to109 and | than those set out innote 2.25 to the | | 2023 AGM and it is proposed that | are incorporated into this report by | Consolidated Financial Statements, | | shareholders will be asked to authorise | reference. During the year under review, | thecontracts ofemployment of | | the Directors to allot shares and | Michael Dobson was appointed as a | theExecutive Directors, which are | | disapply statutory pre-emption | Non-executive Director on 8 June 2022 | terminable within one year, and the | | rightsat the 2023 AGM. | and Glyn Barker resigned as a Non- | appointment terms of the Non-executive | | | executive Director on 6 September | Directors, which are renewable annually | Movements in the Company’s share 2022. All other Directors served and terminable on one month’s notice. capital are shown in note 2.18 to the throughout the year under review and Consolidated Financial Statements. Directors’ indemnities up to the date of thisreport. The Company maintains Directors’ All the Company’s issued share The appointment and replacement andofficers’ liability insurance which capitalis publicly listed on the ofDirectors is governed by the provides appropriate cover for legal LondonStock Exchange. Company’s Articles, the Code, the action brought against its Directors. All shares have full rights in the Companies Act 2006 and any related The Company’s practice has always Company with respect to voting, legislation. The Company, by ordinary been to indemnify its Directors in dividends and distributions, except as resolution, or the Directors may from accordance with the Company’s explained above in respect of treasury time to time appoint a Director to fill Articles and to the maximum extent shares. Further information in respect acasual vacancy or as an additional permitted by law. Qualifying third of the rights and obligations attaching Director. Any Director so appointed shall party indemnities, under which the to the ordinary shares are set out in hold office only until the next AGM and Company has agreed to indemnify the Articles. shall then be eligible for reappointment. theDirectors, were in force during There are no specific restrictions on The Articles require Directors to submit thefinancial year and at the date of the size of a shareholding or on the themselves for re-election every three approval of the Financial Statements, transfer of shares, which are both years. In addition, all Directors are inaccordance with the Company’s governed by the Articles and the subject to election atthe first opportunity Articles and to the maximum extent prevailing law. The Directors are not after their appointment tothe Board. permitted by law, in respect of all aware of any agreements between However, in accordance with the Code, costs, charges, expenses, losses and holders of the Company’s shares all of the Directors, with the exception liabilities which they may incur in or thatmay result in restrictions on the of Sir John Armitt, Diana Brightmore- about the execution of their duties for transfer of shares or on voting rights. Armour, Andy Myers, Justin Tibaldi, the Company, or any entity which is Paul Vallone and Karl Whiteman, who anassociated company (as defined No person has special rights of control willbe stepping down as Directors inSection 256 of the Companies over the Company’s share capital. | | onconclusion of the AGM, will offer | Act 2006), or as a result of duties | | --- | --- | --- | | Information on the Group’s share option | themselves for re-election at the | performed by the Directors on | | schemes is set out in note 2.5 to the | forthcoming AGM to be held on | behalfof the Company or any | | Consolidated Financial Statements. | 8 September 2023. | suchassociated company. | Details of the Long-Term Incentive Each of the Directors proposed Substantial shareholders Schemes and Long-Term Incentive forre-election at the AGM is being The latest notifications received by Plans for key Executives are set out unanimously recommended by all theCompany from shareholders in within the Directors’ Remuneration theother members of the Board. This respect of their interests, pursuant to Report on pages 132 to 156. | | recommendation follows the completion | DTR 5, asat 30 April 2023 are as follows: | | | | | | --- | --- | --- | --- | --- | --- | --- | | Articles of Association | of the annual Board evaluation process, | | | | | | | The Articles set out the basic | which was facilitated internally this year. | | Number of | | % of | | | | | | ordinary | | voting | | | management and administrative | Further information relating to the | | | (i) | | (i) | | | | | shares held | | rights | | | structure of the Company. They | evaluation is set out on page 125. | | | | | | First Eagle regulate the internal affairs of the The interests of the Directors and Investment Company and cover such matters as theirconnected persons in the Management the issue and transfer of shares, Board sharecapital of the Company and LLC 11,209,809 10.26 and shareholder meetings, powers and itssubsidiaries are set out on page duties of Directors and borrowing BlackRock 155. At 30 April 2023 each of the powers. In accordance with the Articles, Inc 11,698,607 8.72 ExecutiveDirectors was deemed Directors canbe appointed or removed tohave a non-beneficial interest Egerton by shareholders in a general meeting. | | in103,506 (2022: 73,732) ordinary | Capital (UK) | | --- | --- | --- | | The Articles may only be amended by | shares held by the Trustees of the | LLP 6,297,439 5.01 | | special resolution at a general meeting | Berkeley Group Employee Benefit | | Artisan of shareholders. The Articles are Trust (EBT). The shares held in the Partners available onthe Company’s website EBT rank pari passu with all other Limited (berkeleygroup.co.uk/investors/ shares in issue. However, the Trustees Partnership 5,616,101 5.01 corporate-governance). Copies are of the EBT has waived entitlement to available by writing to the Company dividends until further notice and has (i) The number of ordinary shares held and Secretary and are also open to agreed not to vote on any shares held percentage of voting rights is as stated by the shareholder at the time of notification. inspection at Companies House. in the EBT at any general meeting. 158 Berkeley Group 2023 Annual Report | Other than as discussed above, | Sustainability | The emissions and energy consumption | | --- | --- | --- | | between 30 April 2023 and 20 June | The Group is committed to being | disclosed: are aligned to the Group’s | | 2023 the Company was not notified | aresponsible and sustainable | financial reporting year; are based | | ofany changes to substantial interests | businesswhich thinks about the | onthe operational boundary of the | | pursuant to DTR 5. | long-term and creates positive | Group covering regional offices, | | | environmental, social and economic | salessuites, development sites, our | Political donations impacts. These aspects are considered modular factory and business vehicle The Group did not make any in the Group’s approach to managing travel; include 100% of joint venture politicaldonations or incur any its operational activities and in the emissions for these activities; and are political expenditure (2022: £nil) homes and places it develops. considered material to the business. during the year. They have the following parameters: The Group has an integrated strategy Capitalised interest for the business: Our Vision 2030. — Scope 1 – direct emissions from No interest has been capitalised Sustainability is a key element of the natural gas consumed for office, Corporate GovernanceStrategic Report bythe Group (2022: £nil) during Group’s strategy with a number of sales and development site activities; theyear under review. | | targets directly relating to material | biodiesel HVO (Hydrotreated | | --- | --- | --- | | Employee engagement | sustainability topics such as climate | Vegetable Oil), diesel, petrol and | | The Group’s policy of operating | change. Information on Our Vision | liquefied petroleum gas (LPG) | | through autonomous subsidiaries | 2030 can be found within the Strategic | purchased directly for development | | hasensured close consultation with | Report and on the Group’s website. | site and modular factory activities; | | employees on matters likely to affect | | and travel (business and other | The Directors have ultimate their interests. The Group is firmly travelwhere expensed) in company responsibility for sustainability committed to the continuation and owned and company leased vehicles withinthe Group. The Sustainability strengthening of communication utilising conventional fuels as an Leadership Team, which meets lineswith all its employees. energy source. Fugitive emissions monthly to set strategic direction resulting from air conditioning Further information is provided andreview performance, consists Financial Statements leakages have been newly included onpages 50 and 80 ofthe ofthe Chief Executive, the Chief for 2023, whilst gas oil emissions StrategicReport. Financial Officer, the Board Director arenot relevant from April 2022. Responsible for Sustainability and the The Group has in place an Equal — Scope 2 – indirect emissions from Group Sustainability Team. Dedicated Opportunities Policy which aims to electricity and heat consumed for operational practitioners work ensure that all employees, potential office, sales, development site and throughout the business to ensure that employees and other individuals modular factory activities; and travel sustainability is incorporated into daily receive equal treatment (including (business and other travel where activities. Group Sustainability Standards access to employment, training, expensed) in company owned and cover our activities, supported by a careerdevelopment and opportunity company leased vehicles utilising detailed Sustainability Management for promotion) regardless of their electricity as an energy source. The System. | age,disability, gender reassignment, | | Group has reported both location- | | --- | --- | --- | | marriage or civil partnership, pregnancy | Scopes 1 and 2 greenhouse gas | based and market-based emissions | | and maternity, race, religion or belief | emissions and energy consumption | for scope 2, with the market-based | | (including lack of belief), sex and | The Group has reported on greenhouse | emissions taking into account | | sexual orientation. | gas (GHG) emissions for which it is | Berkeley’s purchase of Renewable | | | responsible and energy use associated | Energy Guarantees of Origin (REGOs) | Stakeholder engagement with these GHG emissions, as required to certify that 100% of UK electricity The Company recognises the under the Large and Medium-sized is from a renewable source (i.e. solar, importance of good supplier, customer Companies and Groups (Accounts wind or hydro power). and other relationships to the overall andReports) Regulations 2008, success of the business and manages The emissions intensity ratios have asamended by the Companies Act dealings with stakeholders in a fair, been calculated using the floor area of 2006 (Strategic Report and Directors’ consistent and transparent manner. legally completed homes and commercial Report) Regulations 2013 and the space during the year (in square The Company’s s172(1) Statement Companies (Directors’ Report) and metres), including our joint ventures. onpage 79 of the Strategic Report Limited Liability Partnerships (Energy sets out further details of how the and Carbon Report) Regulations 2018. 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. 159Berkeley Group 2023 Annual Report ## DIRECTORS’ REPORT CONTINUED The Group creates homes and neighbourhoods across London, Birmingham and the South of England. As a result, the majority of emissions and energy consumption are UK-based. Global emissions and energy consumption result from electricity usage in eight international offices. In addition to the below reported emissions, in 2023 biogenic CO 2 (considered ‘outside of scopes’) amounted to 3,808 tCO 2 . 2023 2022 | | | | | Global | | | Global | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | (excluding | | | (excluding | | | | | Unit Total UK | | | | UK) Total UK | | | UK) | | Scope 1 emissions tCO | | 2 e 713 713 – 1,974 1,974 – | | | | | | | | Scope 2 (location-based) emissions tCO | | 2 e 4,510 4,352 158 5,858 5,702 156 | | | | | | | | Scope 2 (market-based) emissions tCO | | 2 e 250 92 158 237 81 156 | | | | | | | | Scopes 1 and 2 (location-based) emissions tCO | | 2 e 5,223 5,065 158 7,832 7, 676 156 | | | | | | | | Scopes 1 and 2 (location-based) | tCO | 2 e/ | | | | | | | | emissionsintensity | 100sqm 1.46 – – 2.17 – – | | | | | | | | | Scopes 1 and 2 (market-based) emissions tCO | | 2 e 963 805 158 2,211 2,055 156 | | | | | | | | Scopes 1 and 2 (market-based) | tCO | 2 e/ | | | | | | | | emissionsintensity | 100sqm 0.27 – – 0.61 – – | | | | | | | | Energy consumption associated with scope1emissions MWh 7,572 7,572 – 9,133 9,133 – Energy consumption associated with scope2emissions MWh 22,848 22,568 280 27,202 26,941 261 Energy consumption associated with scopes1and 2 emissions MWh 30,420 30,140 280 36,335 36,074 261 2023 information has been separately subject to limited assurance by KPMG LLP. For further details of the assurance provided in 2023 and prior years, see the independent assurance reports found at www.berkeleygroup.co.uk/sustainability/reports-and-case-studies. ### Energy Consumption by Fuel Type ### 5,223 £216.4m ### tCO e 2 963 £216.4m tCO e 2 ### 89% of our energy ### consumption is from ### renewable sources Location-based Market-based Scope 1 14% Scope 1 GHG Emissions by Scope 77% of energy consumption Scope 2 is a result of £216.4m ### Energy Consumption by Activity Type Vehicle Travel 5% Purchased Electricity Development Site construction Natural Gas 3% – UK 72% Divisional Office site activities Biodiesel HVO 17% Purchased Heat 2% Sales Suite Scope 1 Purchased Electricity Diesel 0% Vehicle Travel 5% – Global exc UK 1% LPG 0% Vehicle Travel 0% Petrol 0% On-site Generated Renewable Electricity 0% 77% 10% 160 Berkeley Group 2023 Annual Report 7% 74% Scope 2 86% Factory Site 1% Scope 2 26% | UK Government Environmental | Significant agreements | Annual General Meeting | | --- | --- | --- | | Reporting Guidelines 2019 have | Pursuant to the Companies Act 2006, | The Company’s AGM will take place | | beenused as the basis for disclosures. | the Company is required to disclose | at11 .00 a.m. on 8 September 2023. | | UK Government GHG Conversion | whether there are any significant | Details of the AGM and arrangements | | Factors for Company Reporting | agreements that take effect, alter or | for engagement with shareholders will | | andInternational Energy Agency | terminate upon a change of control. | be set out within the Notice of Meeting. | conversion factors have been used Change of control provisions are In accordance with the FRC Guidance toconvert raw data units into GHG included as standard in many types on Board Effectiveness, the Company emissions and energy consumption. | | ofcommercial agreements, notably | arranges for the Annual Report and | | | --- | --- | --- | --- | | The Directors confirm that | bank facility agreements and joint | Accounts and related papers to be | | | reportedGHG emissions and energy | venture shareholder agreements, | posted to shareholders so as to allow | | | consumption have been prepared | forthe protection of both parties. | at least 20 working days for consideration | | | inaccordance with the Group’s | Such standard terms are included in | prior to the AGM. | Corporate GovernanceStrategic Report | | established reporting criteria, are | Berkeley’s bank facility agreement | | | At the AGM, voting on all resolutions freefrom material misstatement and which contains provisions that give will be by proxy voting and the results have been presented in a manner that thebanks certain rights upon a of the AGM will be announced to the provides relevant, reliable, comparable change of control of the Company. Stock Exchange shortly after the close and understandable information. In addition, the Company’s share of the meeting. They will also be made Further details on our methodology schemes contain provisions which available on the Company’s website. for reporting emissions and energy takeeffect upon change of control. The terms and conditions of consumption can be found in our These do not entitle the participants appointment for the Non-Executive established reporting criteria available to a greater interest in the shares Directors, which set out their expected at www.berkeleygroup.co.uk/ ofthe Company than that created time commitment, in addition to the sustainability/reports-and-case-studies. bytheinitial grant of the award. service contracts for the Executive TheCompany does not have any Financial Statements A range of actions have been Directors, are available for inspection arrangements with any Director or implemented in the year to reduce during normal business hours at employee that provide compensation emissions. We have continued to theCompany’s registered office. for loss of office or employment encourage the use of biodiesel HVO; Ordinarily, these are also available resulting from a takeover. | in 2023, 89% (2022: 38%) of | | | forinspection at the AGM. | | --- | --- | --- | --- | | construction sites directly procuring | | Independent auditor and disclosure | | | fuel utilised biodiesel HVO as an | | of information to auditor | | | alternative to diesel. This has reduced | | Each of the persons who is a Director | | | scope 1 emissions by 1,328 tCO | 2 e in | at the date of approval of this Annual | | | the year compared to an equivalent | | Report confirms that: | | use of diesel. Other energy efficiency — so far as the Director is aware, there actions include a Group-wide energy is no relevant audit information of awareness campaign including two which the Company’s auditor is weeks of engagement with our unaware; and workforce on ways to reduce energy — the Director has taken all the steps consumption at work; in their own that he/she ought to have taken as homes; and how to spread this aDirector in order to make himself/ knowledge to our customers and herself aware of any relevant audit contractor supply chain. The information and to establish that campaign has inspired our teams theCompany’s auditor is aware of tochallenge themselves and share that information. lessons learnt. We have witnessed | numerous success stories, with one | This confirmation is given and should | | --- | --- | | office achieving a 60% reduction in | be interpreted in accordance with | | weekly consumption mainly due to | theprovisions of Section 418 of the | | achange to their heating strategy, | Companies Act 2006. | whilst our Silkstream development During the year, a competitive tender siteteam is using ground-mounted process was conducted in respect solar panels with supplementary ofthe appointment of the Group’s battery storage to see an energy auditor. Further details are set out in saving of approximately 75% across the Report of the Audit Committee their site cabins. onpage 131. At the conclusion of thisprocess, the Board approved the re-appointment of KPMG, who has confirmed its willingness tocontinue in office. A resolution to re-appoint KPMG LLP as auditor to the Company will be proposed at the AGM. 161Berkeley Group 2023 Annual Report ## DIRECTORS’ REPORT CONTINUED AND ## STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT ## OFTHEANNUAL REPORT AND THE FINANCIAL STATEMENTS The Directors are responsible for They are responsible for such internal In making this assessment, consideration preparing the Annual Report and control as they determine is necessary has been given to the uncertainty theGroup and Parent Company to enable the preparation of Financial inherent in future financial forecasts Financial Statements in accordance Statements that are free from material and where applicable, reasonable with applicable law and regulations. misstatement, whether due to fraud or sensitivities have been applied to error, and have general responsibility thekey factors affecting the Company law requires the Directors to for taking such steps as are reasonably financialperformance of the Group. prepare Group and Parent Company open to them to safeguard the assets The Directors have a reasonable Financial Statements for each financial of the Group and to prevent and expectation that the Group has year. Under that law they are required detect fraud and other irregularities. adequate resources to continue in to prepare the Group Financial operational existence for not less Statements in accordance with Under applicable law and regulations, than12 months from the date of these UK-adopted international accounting the Directors are also responsible Financial Statements. For this reason it standards and applicable law and forpreparing a Strategic Report, continues to adopt the going concern haveelected to prepare the Parent Directors’ Report, Directors’ basis of accounting in preparing its Company Financial Statements in Remuneration Report and Corporate Consolidated Financial Statements. accordance with UK accounting Governance Statement that complies standards and applicable law, with that law and those regulations. By order of the Board including FRS 101 Reduced The Directors are responsible for DisclosureFramework. themaintenance and integrity of the Ann Dibben Under company law the Directors corporate and financial information Company Secretary must not approve the Financial included on the Company’s website. The Berkeley Group Holdings plc Statements unless they are satisfied Legislation in the UK governing the Registered number: 5172586 | that they give a true and fair view of | preparation and dissemination of | | | --- | --- | --- | | the state of affairs of the Group and | Financial Statements may differ | 21 June 2023 | | Parent Company and of the Group’s | fromlegislation in other jurisdictions. | | Directors’ responsibility statement profit or loss for that period. In In accordance with Disclosure Guidance Each of the Directors confirms that, to preparing each of the Group and and Transparency Rule 4.1.14R, the the best of each person’s knowledge: Parent Company Financial Statements, Financial Statements will form part of the directors are required to: — the Consolidated Financial Statements, the Annual Financial Report prepared prepared in accordance with the — select suitable accounting policies using the single electronic reporting applicable set of accounting standards, and then apply them consistently; format under the TD ESEF Regulation. give a true and fair view of the — make judgments and estimates that The auditor’s report on these Financial assets, liabilities, financial position are reasonable, relevant, reliable and Statements provides noassurance over and profit or loss of the Company prudent; the ESEF format. and the undertakings included in the — for the Group Financial Statements, Going concern consolidation taken as a whole; and state whether they have been The Group’s business activities — the Company Financial Statements, prepared in accordance with together with the factors likely which have been prepared in UK-adopted international toaffect its future development accordance with United Kingdom accounting standards; performance and position are set out Accounting Standards, comprising — for the Parent Company Financial in the Strategic Report. The financial FRS 101, give a true and fair view of Statements, state whether position of the Group, itscash flows, the assets, liabilities, financial position applicable UK accounting standards liquidity position and borrowing and results of the Company; and have been followed, subject to any facilities are all described inthe — the Strategic Report, together with material departures disclosed and Trading and Financial Review the Directors’ Report, includes a explained in the Parent Company onpages 30 to 33. fairreview of the development and Financial Statements; performance of the business and — assess the Group and Parent The Directors have assessed the the position of the Group, together Company’s ability to continue as business plan and future funding with a description of the principal agoing concern, disclosing, as requirements of the Group over the risks and uncertainties that it faces, applicable, matters related to medium-term and compared these including those that would threaten its goingconcern; and with the level of committed loan business model, future performance, — use the going concern basis of facilities andexisting cash resources. solvency or liquidity. | accounting unless they either intend | As at 30 April 2023, the Group has | | | --- | --- | --- | | to liquidate the Group or the Parent | netcash of £410.4 million and total | For an on behalf of the Board | | Company or to cease operations, | liquidity of £1,610.4 million when this | | | orhave no realistic alternative but | net cash is combined with banking | | R Perrins todo so. facilities of £800 million, (which expire Chief Executive in February 2028) and £400 million The Directors are responsible for listed Green Bonds (which mature in keeping adequate accounting records R J Stearn August 2031). Furthermore, the Group that are sufficient to show and explain Chief Financial Officer has cash due on forward sales of the Parent Company’s transactions 21 June 2023 £2,136 million, a significant amount and disclose with reasonable accuracy ofwhich covers delivery for the next at any time the financial position of 18 months. the Parent Company and enable them to ensure that its Financial Statements comply with the Companies Act 2006. 162 Berkeley Group 2023 Annual Report ## KPMG LLP’S INDEPENDENT AUDITOR’S REPORT ## TO THE MEMBERS OF THE BERKELEY GROUP HOLDINGS PLC ### 1. Our opinion is unmodified What our opinion covers We have audited the Group and Parent Company Financial Statements of The In our opinion: Berkeley Group Holdings plc (“the Company”) for the year ended 30 April 2023 — the Financial Statements of The (FY23) included in the Annual Report, which comprise: Berkeley Group Holdings plc give Parent Company atrue and fair view of the state Group (The Berkeley Group Holdings plc) ofthe Group’s and of the Parent | Company’s affairs as at 30 April | Consolidated Income Statement, | Company Balance Sheet, Company | | --- | --- | --- | | 2023, and of the Group’s profit | Consolidated Statement of | Statement of Changes in Equity | | forthe year then ended; | Comprehensive Income, Consolidated | andNotes C1 to C2.9 to the Parent | | | Statement of Financial position, | Company financial statements, | — the Group Financial Statements Consolidated Statement of Changes including the accounting policies have been properly prepared in in Equity, Consolidated Cash Flow innotes C1 to C2.9. accordance with UK-adopted Corporate Governance Statement and Notes 1 to 2.26 to international accounting standards; theGroup Financial Statements, — the Parent Company Financial includingthe accounting policies Statements have been properly innotes 1 to 2.26. prepared in accordance with UK accounting standards, including Basis for opinion FRS101 Reduced Disclosure We conducted our audit in accordance with International Standards on Framework; and Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is — the Group and Parent Company asufficient and appropriate basis for our opinion. Our audit opinion and Financial Statements have been matters included in this report are consistent with those discussed and prepared in accordance with the included in our reporting to the Audit Committee. requirements of the Companies Financial StatementsStrategic Report Act2006. 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. ### 2. Overview of our audit of the Parent Company, The Berkeley Our independence Group Holdings plc, due to their We have fulfilled our ethical Factors driving our view of risks materiality in the context of the Parent responsibilities under, and we Our risk assessment considers Company Financial Statements. remainindependent of the Group theGroup’s operations, the macro- inaccordance with, UK ethical economic and other relevant external Key Audit Matters vs FY22 Item requirements including the FRC factors which impact the judgements  Ethical Standard as applied to Cost of sales 4.1 and estimates made by the Group. listedpublic interest entities. recognition Having considered these external | factors, we have identified the same | |  | | Apart from the matter noted below, | | --- | --- | --- | --- | --- | | | Post completion | | 4.2 | | | key audit matters as in the prior year. | | | | wehave not performed any non-audit | development We have also concluded that the services during the year ended 30 April provisions | levelof risk in relation to the key | | | | 2023 or subsequently which are | | --- | --- | --- | --- | --- | | | Recoverability of |  | 4.3 | | | auditmatters remains consistent | | | | prohibited by the FRC Ethical Standard. | Parent Company’s withthe prior year. | | investments in, and | During 2023, we identified that certain | | --- | --- | --- | | Cost of sales recognition includes | amounts due from | KPMG member firms had provided | | estimation over multiple years and | its subsidiaries | preparation of local GAAP financial | | economic cycles and, as a result, the | | statement services over the period | | deterioration in the macro-economic | Audit committee interaction | FY18 to FY23 to entities which were | | environment during FY23 is not | During the year, the Audit Committee | residual components and therefore | | considered to have had a significant | met three times. KPMG is invited to | not in scope for the Group audit. The | | impact on the already high estimation | and attended all Audit Committee | services, which have been terminated, | | uncertainty associated with this key | meetings and is provided with an | were administrative in nature and did | | audit matter. | opportunity to meet with the Audit | not involve any management decision- | | | Committee in private sessions without | making or bookkeeping. The work | Post completion development the Executive Directors being present. wasundertaken after the Group provisions are estimated based on For each key audit matter, we have set auditopinion was signed by KPMG historic experience of liabilities arising out communications with the Audit LLP for the impacted financial years on completed developments and have Committee in section 4, including and had no direct or indirect effect a high level of estimation uncertainty matters that required particular onThe Berkeley Group Holding plc’s that is also not significantly impacted judgement for each. Consolidated Financial Statements. by the deterioration in the macro- economic environment during FY23. The matters included in the Audit In our professional judgment, we Committee Report on page 129 confirm that based on our assessment Recoverability of investments in, arematerially consistent with our ofthe breach, our integrity and andamounts due from, subsidiaries observations of those meetings. objectivity as auditor has not been remains our biggest focus in the audit compromised and we believe that an 163Berkeley Group 2023 Annual Report ## INDEPENDENT AUDITOR’S REPORT CONTINUED objective, reasonable and informed as a whole at £13.5 million revenue, Group profit before tax and third party would conclude that the (FY22: £16.0 million). Group total assets. provision of this service would not Consistent with FY22, we determined Of the Group’s 16 (2022: 16) reporting impair our integrity or objectivity for that Group profit before tax remains components, we subjected seven any of the impacted financial years. the benchmark for the Group as the (2022:six) to full scope audits for The Audit Committee concurred users of the Financial Statements Grouppurposes and three (2022: three) withthis view. | | willbe primarily interested in the | to specified risk-focused audit | | --- | --- | --- | | Following a competitive tender | profitability of the Group and its | procedures. We subjected three | | process undertaken in FY23, the | abilityto generate returns for | (2022:two) components to specified | | Group’s Board has announced its | shareholders. As such, we based | risk-focused audit procedures over | | intention to reappoint KPMG as its | ourGroup materiality on Group | costof sales recognition and post | | external auditor for the financial | profitbefore tax, of which it | completion development provisions | | yearend 30 April 2024, subject to | represents 4.5% (FY22: 4.7%). | andone (2022:one) to specified | | shareholder approval at its 2023 | | risk-focused audit procedures over | Materiality for the Parent Company Annual General Meeting. property, plant and equipment Financial Statements was determined (2022:cash and borrowings). | We were first appointed as auditor | with reference to a benchmark of | | | --- | --- | --- | | bythe Directors for the year ended | Parent Company total assets of | The components within the scope of | | 30 April 2014. The period of total | £1,981.6 million, of which it | our work accounted for the percentages | | uninterrupted engagement is for the | represents0.7% (2022: 0.8%). | illustrated below. | 10 financial years ended 30 April 2023. | | Materiality levels used in our audit | | In addition, we have performed Group | | --- | --- | --- | --- | | The Group engagement partner is | | | level analysis on the residual components | | required to rotate every five years. | | 26.0 | to determine whether further risks | | Asthese are the second set of the | | 27.0 | ofmaterial misstatement exist in | | Group’s Financial Statements signed | | | thosecomponents. | 19.5 by Anna Jones, she will be required GPM 20.2 We consider the scope of our audit, torotate off after the FY26 audit. ascommunicated to the Audit The average tenure of partners 16.0 Committee, to be an appropriate HCM 15.0 responsible for component audits basisfor our audit opinion. asset out in (section 7) below is 16.0 fouryears, with the shortest being PLC 13.5 1% 3% twoand the longest being six. 3.0 LCM Total audit fee £1.3 million 7.0 Audit related fees £0.1 million 1.3 Profit before tax AMPT (including interim review) FY22 £m 1.3 Other services £0.1 million Group Group Materiality Non-audit fee as a % 7% GPM Group Performance Materiality oftotal audit and HCM Highest Component Materiality 96% auditrelated fee % PLC Parent Company Materiality Date first appointed 27 November 1% LCM Lowest Component Materiality 11% 2013 AMPT Audit Misstatement Posting Uninterrupted 10 years Threshold audittenure Group scope Total assets Next financial period FY34 (Item 7 below) which requires a tender We have performed risk assessment and planning procedures to determine Tenure of Group 2 years which of the Group’s components engagement partner arelikely to include risks of material 88% | Average tenure | 4 years | misstatement to the Group Financial | | --- | --- | --- | | ofcomponent | | Statements, the type of procedures | | signingpartners | | tobe performed at these components | and the extent of involvement required 26% Materiality from our component auditors. Group (Item 6 below) The Group operates in the UK across a The scope of our work is influenced Revenue number of components. We scoped the byour view of materiality and our audit by obtaining an understanding of assessed risk of material misstatement. the Group, its environment and assessing We have determined overall the risk of material misstatement at the 74% materiality for the Group Financial Group and component level. Statements as a whole at £27.0 million We have considered components (FY22: £26.0 million) and for the Full scope audits based on their contribution to Group Parent Company Financial Statements Residual components 164 Berkeley Group 2023 Annual Report Specified risk-focused audit procedures FY23 £m The impact of climate Our risk assessment procedures also Our procedures also included: changeonouraudit included comparing operational plans — critically assessing assumptions In planning our audit, we considered for the Group’s existing climate related inthe base case and downside the potential impact of climate initiatives, such as the installation of air scenario, particularly in relation changeon the Group’s business source heat pumps and EV charging toforecast liquidity, by tracing a andits Financial Statements. points on sites, to the Group’s forecast sample of secured sales to customer of future build costs. The Group’s core activities of contracts in order to assess the designing, building, and selling new We have also read the Group’s existence of forward secured sales; homes is a carbon intensive process. disclosure of climate related — inspecting the loan agreements to This includes developing large-scale information in the front half of confirm the nature of the associated regeneration projects to transform theAnnual Report and considered covenant requirements and critically mainly brownfield sites into new consistency with the Financial assessed forecast compliance in the homes and communal spaces by Statements and our audit knowledge. base case and downside scenarios; Corporate Governance usingheavy machinery to demolish — inspecting confirmation from banks ### 3. Going concern, viability | existing structures and constructing | | of the level of cash and cash | | --- | --- | --- | | new buildings using carbon intensive | andprincipal risks and | equivalents held at year end; and | | materials, such as steel and concrete. | uncertainties | — assessing the completeness of | | The Group emits greenhouse gases | | going concern disclosure in notes 1.2 | The Directors have prepared the directly from energy used in its and C1.2 to the Financial Statements. Financial Statements on a going construction operations. | | concern basis as they do not intend | Accordingly, based on those | | | --- | --- | --- | --- | | As part of the Group’s Our Vision | toliquidate the Group or the Parent | procedures, we found the Directors’ | | | 2030, the Group has set targets of | Company or to cease their operations, | use of the going concern basis of | | | reducing greenhouse gas emissions | and as they have concluded that, the | accounting without any material | | | and becoming a net zero business by | Group’s and the Parent Company’s | uncertainty for the Group and Parent | | | 2040. Whilst the Group has set targets | financial position means that this is | Company to be acceptable. However, | Financial StatementsStrategic Report | | to be carbon neutral by 2040, the full | realistic. They have also concluded | as we cannot predict all future events | | | impact on its cost base and on cash | that there are no material uncertainties | or conditions and as subsequent | | | flows are inherently uncertain and the | that could have cast significant doubt | events may result in outcomes that | | | Group’s assessment continues to evolve. | over their ability to continue as a | areinconsistent with judgements that | | | Further information is provided in the | going concern for at least a year from | were reasonable at the time they were | | | Strategic Report on pages 44 to 49 | the date of approval of the Financial | made, the above conclusions are not a | | | and the Group’s TCFD Recommended | Statements (“the going concern period”). | guarantee that the Group or the Parent | | | Disclosure section on pages 62 to 77 | | Company will continue in operation. | | Going concern of the Annual Report. | | We used our knowledge of the Group, | Summary of our conclusions | | --- | --- | --- | | Climate change initiatives and | its industry and the general economic | — We consider that the Directors’ | | commitments could impact the | environment to identify the inherent | useof the going concern basis of | | Group’s future cash flows, particularly | risks to its business model and | accounting in the preparation of the | | the forecasts of future build costs. | analysed how those risks might | Financial Statements is appropriate; | | Forexample, in relation to materials, | affectthe Group’s and Parent | — We have not identified, and concur | | new building technologies, regulatory | Company’s financial resources or | with the Directors’ assessment that | | changes, and changes in specifications. | ability to continue operations over | there is not, a material uncertainty | | The potential effect of climate on build | thegoing concern period. The risk | related to events or conditions that, | | costs in the future is not separately | that we considered most likely to | individually or collectively, may cast | | identifiable and the full extent is | adversely affect the Group’s and | significant doubt on the Group’s or | | uncertain. Our work on the forecasts | Parent Company’s available financial | Parent Company’s ability to continue | | offuture build costs as they apply | resources over this period was a | as a going concern for the going | | tothe estimates of the cost of sales | possible reduction in sales prices and | concern period; | | recognition is discussed in our cost | volumes as a consequence of changes | — We have nothing material to add or | | ofsales recognition key audit matter. | in the economic environment leading | draw attention to in relation to the | | | to a sustained medium-term decline | Directors’ statement in notes 1.2 and | As part of our audit, we have performed inrevenue and profits. C1.2 to the Financial Statements on a risk assessment, including enquiries the use of the going concern basis ofGroup and divisional management We also considered less predictable of accounting with no material tounderstand how the impact of but realistic second order impacts, uncertainties that may cast significant commitments made by the Group such as cost inflation and delays to doubt over the Group and Parent inrespect of climate change, as well construction programmes. Company’s use of that basis for the asthe physical or transition risks of We considered whether these risks going concern period, and we found climate change, may affect the could plausibly affect the liquidity the going concern disclosure in notes Financial Statements and our audit. orcovenant compliance in the going 1.2 and C1.2 to beacceptable; and We also held discussions with our concern period by comparing severe, — The related statement under the ownclimate change professionals but plausible downside scenarios Listing Rules set out on page 162 tochallenge our risk assessment. thatcould arise from these risks ismaterially consistent with the individually and collectively against the Financial Statements and our level of available financial resources auditknowledge. and covenants indicated bythe Group’s financial forecasts. 165Berkeley Group 2023 Annual Report ## INDEPENDENT AUDITOR’S REPORT CONTINUED ### Disclosures of emerging and principal 4. Key audit matters The effect of this matter is that, as part risks and longer-term viability of our risk assessment, we determined What we mean Our responsibility that cost of sales has a high degree of Key audit matters are those matters We are required to perform procedures estimation uncertainty, with a potential that, in our professional judgement, to identify whether there is a material range of reasonable outcomes greater were of most significance in the audit inconsistency between the Directors’ than our materiality for the Financial of the Financial Statements and include disclosures in respect of emerging and Statements as a whole. The Financial the most significant assessed risks of principal risks and the viability statement, Statements (note 1.1) disclose that this material misstatement (whether or not and the Financial Statements and our is unlikely to have a material effect in due to fraud) identified by us, including audit knowledge. the next financial year. those which had the greatest effect on: Based on those procedures, we have Our response to the risk — the overall audit strategy; nothing material to add or draw Our procedures to address the — the allocation of resources attention to in relation to: riskincluded: intheaudit; and | — the Directors’ confirmation within | — directing the efforts of the | Methodology choice: We critically | | --- | --- | --- | | the Principal Risks on page 87 that | engagement team. | assessed whether the cost allocation | | they have carried out a robust | | methodology used by the Group to | We include below the key audit assessment of the emerging and recognise cost of sales, including any matters in decreasing order of principal risks facing the Group, changes in methodology made in the auditsignificance together with including those that would threaten its year, is in accordance with the Group’s ourkey audit procedures to address business model, future performance, accounting policies; those matters and our results from solvency and liquidity; those procedures. These matters Control observation and operation: — the ‘how we manage risks’ disclosures wereaddressed, and our results We attended a haphazard sample of describing these risks and how arebased on procedures undertaken, the Group’s build cost meetings that emerging risks are identified and for the purpose of our audit of the are held for each site to assess the explaining how they are being Financial Statements as a whole. discussion and review of site forecasts. managed and mitigated; and Wedo not provide a separate Our testing of this control included — the Directors’ explanation in the opinionon these matters. assessing whether the appropriate Viability Statement of how they individuals attended the meetings, have assessed the prospects of the ### 4.1 Cost of sales recognition assessing that the site forecast costs Group, over what period they have ### (Group) for developments were challenged done so and why they considered and discussed and cost forecasts that period to be appropriate, and Financial Cost of sales of wereupdated as appropriate. their statement as to whether they | | Statement | £1,853.4 million; | | | --- | --- | --- | --- | | have a reasonable expectation that | | | For a sample of sites that we considered | | | Elements | (2022: | | | the Group will be able to continue in | | | at higher risk of misstatement, due | £1,683.2 million) | operation and meet its liabilities as | | | toeither their size and/or complexity, | | --- | --- | --- | --- | | they fall due over the period of their | | | weinspected whole site forecasts | | | Our assessment |  | | | assessment, including any related | | | andchallenged the Group’s inputs | | | of risk vs FY22 | We have not | | | disclosures drawing attention to any | | | andassumptions by performing the | identified any necessary qualifications or assumptions. following procedures: significant changes | We are also required to review the | in our assessment | Historical comparisons and | | --- | --- | --- | | Viability Statement set out on page 89 | of the level of risk | benchmarking assumptions: We | | under the Listing Rules. | relating to costs | compared forecast sales prices for | | | ofsales compared | units available for sale in the previous | Our work is limited to assessing to FY22. year against recent prices achieved for thesematters in the context of only those units that have been exchanged, theknowledge acquired during our Our results FY23: Acceptable reserved or sold in the current year. Financial Statements audit. As we FY22: Acceptable We also benchmarked forecast sales cannot predict all future events or prices against third party forecasts for conditions and as subsequent events Description of the Key Audit Matter the housing market and considered may result in outcomes that are Cost of sales is subject to estimation economic factors that may impact the inconsistent with judgements that uncertainty as it is dependent on the achievable price on forecast future werereasonable at the time they Group’s estimate of future sales prices sales. For forecast costs we also weremade, the absence of anything and land and build costs, including an assessed management’s historical toreport on these statements is not allowance for risk. accuracy of forecasting sensitised aguarantee as to the Group’s and Further, estimation uncertainty and assumptions against industry indices; Parent Company’s longer-term viability. exposure to market cyclicality exists Test of detail: We agreed a sample of Our reporting within longer term sites. Forecasts costs incurred in the year to invoices We have nothing material to add aredependent on market conditions, and/or payments, as they form part ordraw attention to in relation which can be difficult to predict and ofthe total costs for the site; tothese disclosures. canbe influenced by political and economic factors including, but not We have concluded that these limited to, the future market uncertainties disclosures are materially consistent surrounding the longer-term impacts of with the Financial Statements and macroeconomic factors, uncertainties ouraudit knowledge. over associated costs and sales prices. 166 Berkeley Group 2023 Annual Report | Benchmarking assumptions: | Our results | Our response to the risk | | --- | --- | --- | | Weassessed, based on the risks | We found the cost of sales recognised | We performed the tests below | | highlighted through our inquiries | to be acceptable (FY22 result: acceptable). | ratherthan seeking to rely on any | | withGroup and divisional management | | ofthe Group’s controls because | Further information in the Annual and our inspection of industry costs thenature ofthe balance is such Report and Accounts: See the Audit indices and sales price forecasts, thatwe would expect to obtain Committee Report on page 129 for theappropriateness of allowances auditevidence primarily through details on how the Audit Committee made for cost increases, including thedetailed procedures described. considered cost of sales recognition other potential changes such as new as an area of significant attention, note Our procedures included: regulations or climate related costs 2.12 for the accounting policy on cost inlonger-term developments and — Personnel interviews: We of sales recognition. contingencies held for specific sites; inspectedboard minutes to identifypotential claims to be ### 4.2 Post completion Our sector experience: Corporate Governance provided for and corroborated ### Wechallengedmanagement’s development provision through enquires of Group Directors ### forecastsales price and forecast (Group) and Management, and divisional costassumptions using our own management and compared to expectations based on our knowledge Financial Post completion theGroup’s provision assessments; of the entity and experience of the Statement development — Test of detail: When a provision industry in which the entity operates; Elements provision of hasbeen made for significant £189.0million (2022: Sensitivity analysis: We evaluated known issues and claims, we £157.2 million) theimpact of varying changes in sales critically assessed the Group’s (Note2.16) | prices and build costs on the forecast | | | calculation of the provision held, | | | --- | --- | --- | --- | --- | | margin, used to allocate costs. We also | Our assessment |  | challenged internal remediation | | | performed sensitivity analysis over the | of risk vs FY22 | We have not | costassessments and considered | | | Group’s method for recognising cost | | identified any | third-party evidence, where available; | Financial StatementsStrategic Report | | of sales for longer-term sites. These | | significant changes | — Historical comparisons: Where past | | | evaluations included applying severe, | | in our assessment | events that indicate an obligation | | | but plausible downside scenarios; and | | of the level of risk | may arise have been identified, we | | | | | relating to the | evaluated the Group’s risk assessments | | Assessing transparency: We have postcompletion performed in respect of known and/ alsoconsidered the adequacy of the development or settled issues and considered Group’s disclosures in note 2.12 to provision compared anychanges in the development theFinancial Statements regarding to FY22. portfolio over time, in assessing the degree of judgement, estimation theestimation of the provision; uncertainty and sensitivity to key Our results FY23: Acceptable — Historical comparisons: For assumptions involved in arriving at FY22: Acceptable asample of post completion theforecast site margins and resultant development provisions, we cost of sales recognised. Description of the Key Audit Matter performed a retrospective review, The Group holds post completion Communications with The Berkeley comparing actual rectification costs development provisions in respect Holdings Group plc’s Audit Committee incurred to the Group’s previously ofclaims and construction related Our discussions with and reporting estimated cost to evaluate the liabilities that have arisen, or that tothe Audit Committee included: Group’s forecasting accuracy; priorclaims experience indicates — Our sector experience: We utilised — Our approach to the audit of cost mayarise, subsequent to the the audit team’s experience to ofsales including details of our completion of certain developments. challenge the assumptions over planned substantive procedures and The identification and estimation of appropriateness of the rectification the extent of our control reliance; amounts to be recognised in relation cost assumptions; — Our assessment of the key to post completion development — Enquiry of lawyers: In respect of assumptions used by management provisions is judgemental by its nature open matters of litigation, we held in determining the cost of sales to as it requires the Group to make a enquiries with the Group’s in-house be recognised for units legally number of estimates, including the legal counsel and inspected relevant completed in the year; forecast costs to rectify identified correspondence and considered — Our assessment of the level of issues and whether prior claims against the provisions made; and contingency held within sites experience is reflective of future — Assessing transparency: We have selected for testing; and issues. Therefore, there is a risk that also considered the adequacy of the — The adequacy of disclosures made the estimate is materially misstated. Group’s disclosures in note 2.16 to by the Group on the estimates, and The effect of these matters is that, the Financial Statements regarding related estimation uncertainty, used aspart of our risk assessment, we the degree of judgement, estimation to determine the amount of cost of determined that post completion uncertainty, and sensitivity to key sales to recognise. | | development provisions have a high | assumptions involved in arriving at | | --- | --- | --- | | Areas of particular auditor judgement | degree of estimation uncertainty, with a | the recorded post completion | | We identified the cost, sales, and | potential range of reasonable outcomes | development provisions. | | riskallowance forecast utilised in | greater than our materiality for the | | | management’s estimate as the area | Financial Statements as a whole. The | | | ofparticular auditor judgement. | Financial Statements (note 1.1) disclose | | that this is unlikely to have a material effect in the next financial year. 167Berkeley Group 2023 Annual Report ## INDEPENDENT AUDITOR’S REPORT CONTINUED ### Communications with The Berkeley 4.3 Recoverability of the Parent Company’s investment Group Holdings plc’s Audit Committee ### insubsidiary, and amounts due, from its subsidiaries Our discussions with and reporting to ### (ParentCompany) the Audit Committee included: | — Our approach to the audit of the | Financial | | FY23 FY22 | | --- | --- | --- | --- | | post completion development | Statement | | | | | | Investment carryingvalue | £1,438.1 million £1,435.7 million | | provision including details of our | Elements | | | (Note C2.4) planned substantive procedures; — Our assessment of the Group’s Amounts due from its £536.6 million £532.7 million methodology for accounting subsidiaries (Note C2.5) forprovisions; Our assessment  — Our conclusion on the appropriateness of risk vs FY22 We have not identified any significant changes in our of estimates made in making assessment of the level of risk relating to the recoverability provisions; and ofthe Parent Company investment in, and amounts due, — The adequacy of the disclosures fromits subsidiaries compared to FY22. made by the Group on the estimates, and related estimation Our results FY23: Acceptable uncertainty, used to determine the FY22: Acceptable amount of provisions to recognise. Description of the Key Audit Matter Communications with The Berkeley Areas of particular auditor judgement The carrying amount of the Parent Group Holdings plc’s Audit Committee We identified the Groups’ estimation Company’s investment in subsidiary Our discussions with and reporting of amounts to be recognised as a and amounts due from its subsidiaries tothe Audit Committee included: provision to be the area of particular represents 72.6% and 27.1% auditor judgement. — Our approach to the audit of the (2022: 72.5% and 26.9%) of the Parent recoverability of the Parent Company Our results Company’s total assets, respectively. investment in subsidiary, and amounts We found the amount of post Their recoverability is not at high risk due, from its subsidiaries including completion development provision to of significant misstatement or subject details of our planned substantive be acceptable (FY22 result: acceptable). to significant judgement. However, procedures; and due to their materiality in the context Further information in the Annual — Our conclusion on the of the Parent Company Financial Report and Accounts: See the Audit appropriateness of the carrying Statements, this is considered to be Committee Report on page 129 for value of the Parent Company’s the area that had the greatest effect details on how the Audit Committee investment in subsidiary and on our overall Parent Company audit. considered the post completion amounts due from its subsidiaries. development provision as an area Our response to the risk Our results ofsignificant attention, page 196 for We performed the tests below rather We found the Parent Company’s the accounting policy on the post than seeking to rely on any of the conclusion that there is no impairment completion development provision, and Group’s controls because the nature of its investment in subsidiary and the note 2.16 for the financial disclosures. ofthe balance is such that we would amount due from subsidiaries balance expect to obtain audit evidence to be acceptable (FY22 result: acceptable). primarily through the detailed procedures described. Further information in the Annual Report and Accounts: note C2.4 Our procedures included: forthe accounting policy on of the Test of detail: Parent Company investment in, and amounts due, from its subsidiaries, — We compared the carrying amount and notes C2.4 and C2.5 for the of 100% of the investment with financial disclosures. thesubsidiary’s net assets in the Group’s consolidation to identify whether its net assets, being an approximation of minimum recoverable amount, were in excessof their carrying amount; — We assessed 100% of amounts due from subsidiaries with reference to the relevant debtors’ balances in the Group’s consolidation and checked whether they have positive net assets and therefore coverage ofthedebt owed; and — We assessed whether those subsidiaries have historically beenprofit making. 168 Berkeley Group 2023 Annual Report ### 5. Our ability to detect recognition and post completion Risk communications development provisions. On this audit We communicated identified laws and ### irregularities, and our we do not believe there is a fraud risk regulations throughout the audit team ### response related to revenue recognition as the and remained alert to any indications of Fraud – identifying and responding accounting for the Group’s revenue is non-compliance throughout the audit. to risks of material misstatement non-complex and the majority is only Direct laws context and link to audit dueto fraud recognised on the legal completion of The potential effect of these laws Fraud risk assessment the sale, being the point at which the andregulations on the Financial To identify risks of material misstatement balance of the sale is paid for and title Statements varies considerably. due to fraud (“fraud risks”) we assessed of the unit transfers to the customer. events or conditions that could indicate There are therefore limited levels of The Group is subject to laws and an incentive or pressure to commit judgement with limited opportunities regulations that directly affect the fraud or provide an opportunity to for manual intervention in the sales financial statements including financial Corporate Governance commit fraud. Our risk assessment process to fraudulently manipulate reporting legislation (including related procedures included: revenue. We did not identify any companies legislation), distributable additional fraud risks. profits legislation, taxation legislation — our forensic specialists assisted and the Building Safety Act and we usinidentifying key fraud risks. Procedures to address fraud risks assessed the extent of compliance Thisincluded attending the Risk In determining the audit procedures, with these laws and regulations as Assessment and Planning Discussion, we took into account the results of our part of our procedures on the holding a discussion with the evaluation and testing of the operating relatedFinancial Statement items. engagement partner, engagement effectiveness of some of the Group- manager, and engagement quality wide fraud risk management controls. Most significant indirect law/ control reviewer, and assisting with We also performed procedures including: regulation areas designing relevant audit procedures The Group is subject to many other — identifying journal entries and other to respond to the risk of management laws and regulations where the adjustments to test for all entities Financial StatementsStrategic Report override of controls; consequences of non-compliance across the Group based on specific — enquiring of Directors, the Audit could have a material effect on risk-based criteria and comparing Committee, internal audit, internal amounts or disclosures in the Financial the identified entries to supporting legal counsel and inspection of Statements, for instance through the documentation. These included policy documentation as to the imposition of fines or litigation or the those posted by senior finance Group’s high-level policies and loss of the Group’s license to operate. management, those posted to procedures to prevent and detect unusual accounts, seldom used We identified the following areas as fraud, including the internal audit accounts and journals posted those most likely to have such an effect: function, and the Group’s channel for byleavers; and ‘whistleblowing’, as well as whether — UK planning permission and — assessing whether the judgements they have knowledge of any actual, buildingregulations; made in making accounting estimates suspected or alleged fraud; — health and safety; are indicative of a potential bias. | — reading Board, Audit Committee and | | — anti-bribery; | | --- | --- | --- | | Remuneration Committee minutes; | Laws and regulations – identifying | — anti-money laundering and | | — considering remuneration incentive | and responding to risks of material | sanctions checking; | | schemes (particularly the 2011 | misstatement relating to compliance | — employment laws; | | LTIP)and performance targets | with laws and regulations | — data protection laws; and | | formanagement and Directors, | Laws and regulations risk assessment | — environmental laws. | | including any revenue and trading | We identified areas of laws and | | Auditing standards limit the required margin targets for management regulations that could reasonably audit procedures to identify non- remuneration; and beexpected to have a material effect compliance with these laws and — using analytical procedures on the Financial Statements from regulations to enquiry of the toidentify any unusual or ourgeneral commercial and sector Directorsand other management unexpected relationships. experience, through discussion with andinspection of regulatory and legal the Directors and other management Risk communications correspondence, if any. Therefore if (as required by auditing standards), We communicated identified fraud abreach of operational regulations and from inspection of the Group’s risks throughout the audit team and isnot disclosed to us or evident from regulatory and legal correspondence remained alert to any indications of relevant correspondence, an audit and discussed with the Directors and fraud throughout the audit. willnot detect that breach. other management the policies and Fraud risks procedures regarding compliance Context As required by auditing standards and withlaws and regulations. Context of the ability of the taking into account our overall knowledge audittodetect fraud or breaches As the Group is regulated, our of the control environment, we perform oflaw orregulation assessment of risks involved gaining procedures to address the risk of Owing to the inherent limitations an understanding of the control management override of controls, ofanaudit, there is an unavoidable environment including the Group’s inparticular the risk that Group and risk that we may not have detected procedures for complying with component management may be some material misstatements in the regulatory requirements. inaposition to make inappropriate Financial Statements, even though we accounting entries and the risk of have properly planned and performed biasin accounting estimates and our audit in accordance with auditing judgements such as cost of sales standards. For example, the further 169Berkeley Group 2023 Annual Report ## INDEPENDENT AUDITOR'S REPORT CONTINUED 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 fraud 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. Our determination of materiality The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating the effect of misstatements, both individually and in the aggregate, on the Financial Statements as a whole. | **£27.0 million** (FY22: £26.0 million) | **What we mean** A quantitative reference for the purpose of planning and performing our audit. | | --- | --- | | **Materiality for the Group Financial Statements as a whole** | **Basis for determining materiality and judgements applied** Materiality for the Group Financial Statements as a whole was set at £ 27.0 million (FY22: £26.0 million). This was determined with reference to a benchmark of Group profit before tax. Consistent with FY22, we determined that Group profit before tax remains the main benchmark for the Group as the users of the Financial Statements will be primarily interested in the profitability of the Group and its ability to generate returns for shareholders. Our Group materiality of £27.0 million was determined by applying a percentage to the Group profit before tax. When using a benchmark of profit before tax to determine overall materiality, KPMG's approach for listed entities considers a guideline range 3% - 5% of the measure. In setting overall Group materiality, we applied a percentage of 4.5% (FY22: 4.7%) to the benchmark. Materiality for the Parent Company Financial Statements was set at £13.5 million (2022: £16.0 million) determined with reference to a benchmark of Parent Company total assets of £1,981.6 million (2022: £1,980.0 million), of which it represents 0.7% (FY22: 0.8%). | | **£20.2 million** (FY22: £19.5 million) | **What we mean** 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** | **Basis for determining materiality and judgements applied** We have considered performance materiality at a level of 75% (FY22: 75%) of materiality for The Berkeley Group Holdings plc Group Financial Statements as a whole to be appropriate. This has therefore been set at £20.2 million (FY22: £19.5 million). The Parent Company performance materiality was set at £10.1 million (FY22: £12.0 million), which equates to 75% (FY22: 75%) of materiality for the Parent Company Financial Statements as a whole. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. | | **£1.3 million** (FY22: £1.3 million) | **What we mean** This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative point of view. We may become aware of misstatements below this threshold which could alter the nature, timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicators of fraud. This is also the amount above which all misstatements identified are communicated to The Berkeley Group Holdings plc's Audit Committee. | | **Audit misstatements posting threshold** | **Basis for determining materiality and judgements applied** We set our audit misstatement posting threshold at 5% (FY22: 5%) of our materiality for the Group Financial Statements. We also report to the Audit Committee any other identified misstatements that warrant reporting on qualitative grounds. | 170 Berkeley Group 2023 Annual Report The overall materiality for the Group Financial Statements of £27.0 million (FY22: £26.0 million) compares as follows to the main Financial Statement caption amounts: | | Total Group Revenue | | Group Profit Before Tax | | Total Group Assets | | | --- | --- | --- | --- | --- | --- | --- | | | FY23 | FY22 | FY23 | FY22 | FY23 | FY22 | | Financial statement Caption | £2,550.2m | £2,348.0m | £604.0m | £551.5m | £6,859.7m | £6,587.7m | | Group Materiality as % of caption | 1.1% | 1.1% | 4.5% | 4.7% | 0.4% | 0.4% | ### 7. The scope of our audit # **Group scope** # **What we mean** How the Group audit team determined the procedures to be performed across the Group. The Group has 16 (2022: 16) reporting components. In order to determine the work performed at the reporting component level, we identified those components which we considered to be of individual financial significance, those which were significant due to risk and those remaining components on which we required procedures to be performed to provide us with the evidence we required in order to conclude on the Group Financial Statements as a whole. We scoped the audit by obtaining an understanding of the Group and its environment and assessing the risk of material misstatement at the Group and component level. The Group operates within the UK and all audit work is performed by the same audit team. We determined individually financially significant components as those contributing at least 10% (2022: 10%) of Group total assets or 10% of Group revenue (2022: 10%). We selected Group revenue and Group total assets because these are the most representative of the relative size of the components. We identified 6 (2022: 6) components as individually financially significant components and performed full scope audits on these components. In addition to the individually financially significant components, we identified 3 (2022: 3) components as significant, owing to significant risks of material misstatement affecting the Group Financial Statements. Of the 3 (2022: 3) components identified as significant due to risk, we performed specific risk-focused audit procedures over provisions and cost of sales. In addition, to enable us to obtain sufficient appropriate audit evidence for the Group Financial Statements as a whole, we selected 1 (2022: 1) components on which to performed specified risk-focused audit procedures over property, plant and equipment balance. The components within the scope of our work accounted for the following percentages of the Group's results, with the prior year comparatives indicated in brackets: | Scope | Number of Components | Range of Materiality Applied | Group Revenue | Group PBT | Group Total Assets | | --- | --- | --- | --- | --- | --- | | Full scope audit | 7 | £8m-£15m | 74% (100%) | 96% (81%) | 88% (85%) | | Specified risk focused audit procedures | 4 | £7m-£8m | 26% (0%) | 3% (16%) | 11% (11%) | The remaining 1% (2022: 3%) of Group profit before tax and 1% (2022: 4%) of total Group assets is represented by reporting components, none of which individually represented more than 0.1% (2022: 0.1%) of any of total Group revenue, Group profit before tax or total Group assets. For these 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. For the audit of the Group Financial Statements, we were able to rely upon the Group's internal controls over financial reporting in several areas of our audit, where our controls testing supported this approach, which enabled us to reduce the scope of our substantive audit work. The Parent Company audit is subject to a full scope, fully substantive audit. # **Group audit team oversight** # **What we mean** The extent of the Group audit team's involvement in component audits. The work on all components (2022: all components) within the scope of our work, including the audit of the Parent Company was performed by the Group team. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 171 ## INDEPENDENT AUDITOR’S REPORT CONTINUED ### 8. Other information in the Corporate Governance disclosures Other matters on which we are Our responsibility required to report by exception ### Annual Report We are required to perform Our responsibility The Directors are responsible for procedures to identify whether Under the Companies Act 2006, theother information presented in thereis a material inconsistency weare required to report to you if, theAnnual Report together with the between the Financial Statements inour opinion: Financial Statements. Our opinion andour audit knowledge, and: — adequate accounting records onthe Financial Statements does — the Directors’ statement that they havenot been kept by the Parent notcover the other information and, consider that the Annual Report Company, or returns adequate for accordingly, we do not express an andFinancial Statements taken our audit have not been received audit opinion or, except as explicitly asawhole is fair, balanced and from branches not visited by us; or stated below, any form of assurance understandable, and provides — the Parent Company Financial conclusion thereon. theinformation necessary for Statements and the part of the All other information shareholders to assess the Group’s Directors’ Remuneration Report Our responsibility position and performance, business tobe audited are not in agreement Our responsibility is to read the other model and strategy; with the accounting records and information and, in doing so, consider — the section of the Annual Report returns; or whether, based on our Financial describing the work of the Audit — certain disclosures of Directors’ Statements audit work, the information Committee, including the significant remuneration specified by law therein is materially misstated or issues that the Audit Committee arenot made; or inconsistent with the Financial considered in relation to the — we have not received all the Statements or our audit knowledge. Financial Statements, and how information and explanations theseissues were addressed; and werequire for our audit. Our reporting — the section of the Annual Report Based solely on that work we have not Our reporting that describes the review of identified material misstatements or We have nothing to report theeffectiveness of the Group’s inconsistencies in the other information. intheserespects. riskmanagement and internal Strategic Report and Directors’ Report control systems. Our responsibility and reporting We are also required to review the Based solely on our work on the other part of the Corporate Governance information described above we report Statement relating to the Group’s to you as follows: compliance with the provisions of — we have not identified material theUK Corporate Governance misstatements in the Strategic Codespecified by the Listing Report and the Directors’ Report; Rulesforour review. — in our opinion the information given Our reporting in those reports for the financial Based on those procedures, we year is consistent with the Financial haveconcluded that each of these Statements; and disclosures is materially consistent — in our opinion those reports have with the Financial Statements and been prepared in accordance with ouraudit knowledge. the Companies Act 2006. We have nothing to report Directors’ Remuneration Report inthisrespect. Our responsibility We are required to form an opinion as to whether the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Our reporting In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. 172 Berkeley Group 2023 Annual Report ### 9. Respective responsibilities 10. The purpose of our audit ### work and to whom we owe Directors’ responsibilities ### As explained more fully in their our responsibilities statement set out on page 162, This report is made solely to the theDirectors are responsible for: Company’s members, as a body, in thepreparation of the Financial accordance with Chapter 3 of Part 16 Statements including being satisfied of the Companies Act 2006. Our audit that they give a true and fair view; work has been undertaken so that we such internal control as they determine might state to the Company’s members is necessary to enable the preparation those matters we are required to state of Financial Statements that are free to them in an auditor’s report and for from material misstatement, whether no other purpose. To the fullest extent due to fraud or error; assessing the Corporate Governance permitted by law, we do not accept or Group and Parent Company’s ability assume responsibility to anyone other to continue as a going concern, than the Company and the Company’s disclosing, as applicable, matters members, as a body, for our audit related to going concern; and using work, for this report, or for the the going concern basis of accounting opinions we have formed. 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. Anna Jones | Auditor’s responsibilities | (SeniorStatutoryAuditor) | | | --- | --- | --- | | Our objectives are to obtain | for and on behalf of KPMG LLP, | | | reasonable assurance about whether | Statutory Auditor | Financial StatementsStrategic Report | | the Financial Statements as a whole | Chartered Accountants | | | are free from material misstatement, | London | | | whether due to fraud or error, and to | 21 June 2023 | | 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. The Company is required to include these Financial Statements in an Annual Rinancial report prepared using the single electronic reporting format specified in the TD ESEF Regulation. This auditor’s report provides no assurance over whether the Annual Financial Report has beenprepared in accordance with that format. 173Berkeley Group 2023 Annual Report ## CONSOLIDATED INCOME STATEMENT | For the year ended 30 April | Notes | 2023 £m | 2022 £m | | --- | --- | --- | --- | | Revenue | 2.1 | **2,550.2** | 2,348.0 | | Cost of sales | | **(1,853.4)** | (1,683.2) | | **Gross profit** | | **696.8** | 664.8 | | Net operating expenses | | **(178.5)** | (156.9) | | **Operating profit** | | **518.3** | 507.9 | | Finance income | 2.3 | **23.1** | 2.5 | | Finance costs | 2.3 | **(33.7)** | (15.0) | | Share of results of joint ventures using the equity method | 2.11 | **96.3** | 56.1 | | **Profit before taxation for the year** | | **604.0** | 551.5 | | Income tax expense | 2.6 | **(138.3)** | (69.1) | | **Profit after taxation for the year** | | **465.7** | 482.4 | | **Earnings per share (pence):** | | | | | — Basic | 2.7 | **426.8** | 417.8 | | — Diluted | 2.7 | **422.4** | 411.4 | ## CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | For the year ended 30 April | Notes | 2023 £m | 2022 £m | | --- | --- | --- | --- | | **Profit after taxation for the year** | | **465.7** | 482.4 | | Other comprehensive expense | | | | | Items that will not be reclassified to profit or loss: | | | | | Actuarial loss recognised in the pension scheme | 2.5 | **(1.3)** | (1.6) | | **Total items that will not be reclassified to profit or loss** | | **(1.3)** | (1.6) | | **Other comprehensive expense for the year** | | **(1.3)** | (1.6) | | **Total comprehensive income for the year** | | **464.4** | 480.8 | 174 Berkeley Group 2023 Annual Report # CONSOLIDATED STATEMENT OF FINANCIAL POSITION | As at 30 April | Notes | 2023 £m | 2022 £m | | --- | --- | --- | --- | | **Assets** | | | | | **Non-current assets** | | | | | Intangible assets | 2.8 | 17.2 | 17.2 | | Property, plant and equipment | 2.9 | 34.6 | 40.5 | | Right-of-use assets | 2.10 | 5.2 | 5.8 | | Investments in joint ventures | 2.11 | 223.4 | 190.4 | | Deferred tax assets | 2.17 | 114.5 | 120.7 | | | | **394.9** | **374.6** | | **Current assets** | | | | | Inventories | 2.12 | 5,302.1 | 5,134.0 | | Trade and other receivables | 2.13 | 92.3 | 145.7 | | Current tax assets | | - | 4.5 | | Cash and cash equivalents | 2.14 | 1,070.4 | 928.9 | | | | **6,464.8** | **6,213.1** | | **Total assets** | | **6,859.7** | **6,587.7** | | **Liabilities** | | | | | **Non-current liabilities** | | | | | Borrowings | 2.23 | (660.0) | (660.0) | | Trade and other payables | 2.15 | (863.4) | (719.8) | | Lease liabilities | 2.10 | (2.9) | (3.8) | | Provisions for other liabilities and charges | 2.16 | (115.1) | (98.5) | | | | **(1,641.4)** | **(1,482.1)** | | **Current liabilities** | | | | | Trade and other payables | 2.15 | (1,801.6) | (1,904.9) | | Lease liabilities | 2.10 | (2.2) | (2.1) | | Current tax liabilities | | (3.7) | - | | Provisions for other liabilities and charges | 2.16 | (78.5) | (62.5) | | | | **(1,886.0)** | **(1,969.5)** | | **Total liabilities** | | **(3,527.4)** | **(3,451.6)** | | **Total net assets** | | **3,332.3** | **3,136.1** | | **Equity** | | | | | **Shareholders' equity** | | | | | Share capital | 2.18 | 6.3 | 6.5 | | Share premium | 2.18 | 49.8 | 49.8 | | Capital redemption reserve | 2.19 | 25.2 | 25.0 | | Other reserve | 2.19 | (961.3) | (961.3) | | Retained earnings | 2.19 | 4,212.3 | 4,016.1 | | **Total equity** | | **3,332.3** | **3,136.1** | The financial statements on pages 174 to 210 were approved by the Board of Directors on 21 June 2023 and were signed on its behalf by: R J Stearn Chief Financial Officer Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 175 ## CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | | Notes | Share capital £m | Share premium £m | Capital redemption reserve £m | Other reserve £m | Retained earnings £m | Total equity £m | | --- | --- | --- | --- | --- | --- | --- | --- | | At 1 May 2022 | | 6.5 | 49.8 | 25.0 | (961.3) | 4,016.1 | 3,136.1 | | Profit after taxation for the year | | - | - | - | - | 465.7 | 465.7 | | Other comprehensive expense for the year | | - | - | - | - | (1.3) | (1.3) | | Purchase of own shares | 2.18 | (0.2) | - | 0.2 | - | (155.4) | (155.4) | | Transactions with shareholders: | | | | | | | | | — Charge in respect of employee share schemes | 2.5 | - | - | - | - | (4.5) | (4.5) | | — Deferred tax in respect of employee share schemes | 2.17 | - | - | - | - | (9.8) | (9.8) | | — Dividends to equity holders of the Company | 2.20 | - | - | - | - | (98.5) | (98.5) | | **At 30 April 2023** | | **6.3** | **49.8** | **25.2** | **(961.3)** | **4,212.3** | **3,332.3** | | At 1 May 2021 | | 6.6 | 49.8 | 24.9 | (961.3) | 4,055.4 | 3,175.4 | | Profit after taxation for the year | | - | - | - | - | 482.4 | 482.4 | | Other comprehensive expense for the year | | - | - | - | - | (1.6) | (1.6) | | Purchase of own shares | 2.18 | (0.1) | - | 0.1 | - | (63.7) | (63.7) | | Transactions with shareholders: | | | | | | | | | — Charge in respect of employee share schemes | 2.5 | - | - | - | - | (8.7) | (8.7) | | — Deferred tax in respect of employee share schemes | 2.17 | - | - | - | - | 3.8 | 3.8 | | — Dividends to equity holders of the Company | 2.20 | - | - | - | - | (451.5) | (451.5) | | **At 30 April 2022** | | **6.5** | **49.8** | **25.0** | **(961.3)** | **4,016.1** | **3,136.1** | 176 Berkeley Group 2023 Annual Report ## CONSOLIDATED CASH FLOW STATEMENT | For the year ended 30 April | Notes | 2023 £m | 2022 £m | | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | Cash generated from operations | 2.22 | **472.5** | 372.4 | | Consideration paid for 50% share of St William assets | 2.22 | - | (355.6) | | Interest received | | **18.2** | 1.9 | | Interest paid | | **(21.4)** | (5.6) | | Income tax paid | | **(133.7)** | (142.6) | | Net cash flow from operating activities | | **335.6** | (129.5) | | **Cash flows from investing activities** | | | | | Purchase of property, plant and equipment | 2.9 | **(2.0)** | (1.3) | | Proceeds on disposal of property, plant and equipment | | **0.8** | 0.3 | | Dividends from joint ventures | 2.11 | **74.9** | - | | Increase in loans with joint ventures | 2.11 | **(11.6)** | (26.7) | | Net cash flow from investing activities | | **62.1** | (27.7) | | **Cash flows from financing activities** | | | | | Lease capital repayments | | **(2.3)** | (1.9) | | Purchase of own shares | 2.19 | **(155.4)** | (63.7) | | Dividends/B-Share payments to Company's shareholders | 2.20 | **(98.5)** | (451.5) | | Drawdown of bank borrowings | 2.23 | - | 260.0 | | Increase in listed debt borrowings | 2.23 | - | 400.0 | | Repayment of bank borrowings | 2.23 | - | (300.0) | | Repayment of St William bank borrowings | | - | (185.0) | | Net cash flow from financing activities | | **(256.2)** | (342.1) | | Net increase/(decrease) in cash and cash equivalents | 2.22 | **141.5** | (499.3) | | Cash and cash equivalents at the start of the financial year | | **928.9** | 1,428.2 | | Cash and cash equivalents at the end of the financial year | 2.22 | **1,070.4** | 928.9 | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 177 # NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ## 1 Basis of preparation ### 1.1 Introduction These Consolidated Financial Statements have been prepared and approved by the Directors in accordance with UK-adopted International Accounting Standards (UK-adopted IFRS). The Company has elected to prepare its Parent Company financial statements in accordance with FRS 101; these are presented on pages 211 to 216. The Group Financial Statements consolidate those of the Company and its subsidiaries (together referred to as the Group) and equity account the Group's interest in joint ventures. The Parent Company financial statements present information about the Company as a separate entity and not about its Group. The Consolidated Financial Statements have been prepared under the historical cost convention and on the going concern basis. Historical cost is generally based on the fair value of the consideration given in exchange for the assets: # **Critical accounting judgements and key sources of estimation uncertainty** The preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) requires the use of certain critical accounting estimates. It also requires management to exercise their judgement in the process of applying the Group's accounting policies. The key areas involving estimation uncertainty, which are significant to the Consolidated Financial Statements, are: - cost of sales recognition which is dependent on an estimate of future selling prices and build costs. See note 2.12; and - post completion development provisions which rely on management judgement in estimating the quantum and timing of outflows of resources to settle any associated legal or constructive obligations. See note 2.16. Whilst these are key areas of estimation uncertainty, these are unlikely to have a material impact on the carrying value of assets and liabilities in the next financial year. The significant areas of judgement exercised by management are detailed below: # **Critical area of judgement in applying the Group's accounting policies** # **Asset acquisition** In the prior year, the Group acquired the outstanding 50% partnership interest in its joint venture St William Homes LLP from National Grid plc, following which St William Homes LLP became a wholly owned subsidiary of the Group. The Directors applied the optional 'concentration test' under IFRS 3 'Business Combinations' whereby the transaction was accounted for as the acquisition of a set of assets concentrated in inventory. The cash consideration paid in excess of National Grid's 50% share of the net assets of St William reflected additional land cost within inventory in the Group's Balance Sheet of £238 million. # **Group accounting policies** The significant Group accounting policies are included within the relevant notes to the Consolidated Financial Statements on pages 178 to 210. The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements. ### 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 2023, the Group had net cash of £410.4 million and total liquidity of £1,610.4 million when this net cash is combined with banking facilities of £800 million (committed to February 2028), of which £540 million in undrawn, and £400 million listed bonds (which mature in August 2031). Furthermore, the Group has cash due on forward sales of £2,135.7 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, the Directors continue to adopt the going concern basis of accounting in preparing the Consolidated Financial Statements. ### 1.3 Consideration of climate change In preparing the Financial Statements, consideration has been given to the Group's activities to address climate change as part of Our Vision 2030 and its assessment and reporting of future climate-related transitional and physical risks under the Task Force on Climate-related Financial Disclosures (TCFD) framework, both of which are set out in the Strategic Report. The costs of developing the Group's sites are held in inventory as these are trading in nature and are therefore taken through cost of sales to match the revenue generated by the sale of properties on each development. The recognition of cost of sales, and therefore the carrying value of inventory, during a financial year is made by reference to the latest assessment of each development's forecast profit margin, which is a key area of estimation uncertainty as set out in Note 2.12. 178 Berkeley Group 2023 Annual Report Corporate Governance Financial StatementsStrategic Report 179Berkeley Group 2023 Annual Report The cost of specific climate change related activities undertaken as part of the development of a site are inherently difficult to disassociate from other input costs as these typically involve a myriad of inter-related design and construction based solutions, for instance over the selection of key materials and technologies adopted to reduce embodied carbon and minimise future energy use of the Group’s occupied homes. In turn, these activities are regulated by prevailing building regulations and planning requirements. Therefore, the forecast cost estimates used to determine the cost of sales recognition during the financial year inherently reflect the Group’s current development-specific climate related actions through its cost plans which align to the development solution. Consistent with the higher cost uncertainty inherent in its longer-term developments from evolving regulatory and other market-led changes, the Group may incur as yet unknown costs associated with its own future climate-related actions as well as costs arising from the impact of climate change. As set out in Note 2.12, the Group’s cost assessments and allocation evolve over the life of each development. 1.4 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 in 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. 1.5 Adoption of new and revised standards The following amendments to standards and interpretations are applicable to the Group and are mandatory for the first time for the financial year beginning 1 May 2022: — IAS 16 Property, Plant and Equipment: Proceeds before Intended Use; — IAS 37 Onerous Contracts: Cost of Fulfilling a Contract; — IFRS 3 Business Combinations: References to the Conceptual Framework; and — Annual Improvements to IFRS 9 Financial Instruments. The Group did not have to change its accounting policies or make retrospective adjustments as a result of these amendments. 1.6 Impact of standards and interpretations in issue but not yet effective The International Accounting Standards Board (“IASB”) has published the following amendments to IFRSs which will be applicable to the Group for the financial year beginning 1 May 2023. These amendments are not expected to have a significant impact on the results of the Group: — Amendments to IAS 1 Presentation of Financial Statements; — Amendments to IFRS 17 Insurance Contracts; — Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and — Amendments to IAS 12 Income Taxes. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED ## 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. For the significant majority of residential and commercial property sales, 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. This is determined as the point of legal completion. Where revenue arises on contracts where the customer controls the property during construction and for which the Group has a right to payment for work performed, the Group recognises revenue over time. Revenue and costs are recognised with reference to the stage of completion of the contract, measured by construction progress. 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Residential revenue | 2,508.3 | 2,302.0 | | Commercial revenue | 41.9 | 46.0 | | | 2,550.2 | 2,348.0 | Included within revenue is £396.0 million (2022: £356.6 million) of customer deposits, received in prior years, for units that legally completed in the year. Included within commercial revenue is £18.1 million (2022: £14.7 million) of revenue recognised in relation to the stage of completion of the contract. Included within residential revenue is £15.2 million (2022: £nil) of revenue recognised in relation to the stage of completion of the contract. ### 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. ### 2.3 Net finance costs | | 2023 £m | 2022 £m | | --- | --- | --- | | **Finance income** | **23.1** | **2.5** | | **Finance costs** | | | | Interest payable on borrowings and non-utilisation fees | (21.9) | (12.1) | | Amortisation of facility fees | (1.7) | (1.8) | | Other finance costs | (10.1) | (1.1) | | | (33.7) | (15.0) | | **Net finance costs** | **(10.6)** | **(12.5)** | Finance income predominantly represents interest earned on cash deposits. Other finance costs represent imputed interest on land purchased on deferred settlement terms and lease interest. 180 Berkeley Group 2023 Annual Report ## 2.4 Profit before taxation Expenditure recorded in inventory is expensed through cost of sales at the time of the related property sale. The amount of cost related to each property includes its share of the overall site costs including, where relevant, its share of forecast costs to complete. Net operating expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provision is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. See inventories note 2.12 for further disclosures on the key estimates and judgements around cost recognition. Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attached to them and the grants will be received. Grants related to assets are deducted from the carrying value of the asset, and are recognised in the Income Statement so as to match with the related costs they are intended to compensate for. Profit before taxation is stated after charging the following amounts: | | 2023 £m | 2022 £m | | --- | --- | --- | | Staff costs (note 2.5) | 304.0 | 280.7 | | Depreciation on property, plant and equipment (note 2.9) | 3.4 | 3.8 | | Depreciation on right-of-use assets (note 2.10) | 2.2 | 1.8 | | Loss on sale of property, plant and equipment | 3.7 | 0.1 | | Fees paid and payable to the Company's auditor for the audit of the Group and Parent Company | 1.2 | 0.9 | | Fees paid and payable to the Company's auditor for other services: | | | | — Audit of the Company's subsidiaries and joint ventures | 0.1 | 0.1 | | — Audit related assurance services | 0.1 | 0.1 | | — Non-audit related assurance services | 0.1 | 0.1 | The value of inventories expensed and included in the cost of sales is £1,760.4 million (2022: £1,630.3 million). Government grants of £13.3 million (2022: £nil) were received in the year relating to the provision of highway infrastructure, for which all performance conditions were satisfied. Fees incurred in the year to the Group's current auditor for audit and non-audit related assurance services relate to the interim review and assurance services related to carbon emissions and compliance with Berkeley's Green Financing Framework. In addition to the above services, the Group's current auditor acted as auditor to the Berkeley Final Salary Plan in the year ended 30 April 2022, for which a fee of £10,000 was paid. They are not appointed as the auditor for the year ended 30 April 2023. ## 2.5 Directors and employees Profit before taxation is stated after charging the following amounts: | | 2023 £m | 2022 £m | | --- | --- | --- | | Staff costs: | | | | Wages and salaries | 253.8 | 238.6 | | Social security costs | 32.5 | 31.5 | | Share based payments – equity settled | 3.0 | 2.0 | | Share based payments – cash settled | 4.6 | (0.8) | | Pension costs | 10.1 | 9.4 | | | 304.0 | 280.7 | The average monthly number of persons employed by the Group during the year was 2,973 (2022: 2,911). ## 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Directors' remuneration | 2.2 | 2.3 | | Amount charged under long-term incentive schemes | 3.1 | 1.9 | | Company contributions to the defined contribution pension schemes | 0.1 | 0.1 | | | 5.4 | 4.3 | Berkeley Group 2023 Annual Report 181 Strategic Report Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 2.5 Directors and employees continued The Directors' Remuneration Report includes disclosure of the gains made by Directors on the exercise of share options during the year, which were £14.4 million (2022: £21.4 million) in aggregate. The number of Directors accruing benefits under defined contribution pension schemes in the year was one (2022: one). 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 estimate 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 three (2022: one) equity settled share based payment schemes. The charge to the Income Statement in respect of share based payments in the year relating to grants of share options awarded under the 2011 Long-term Incentive Plan (2011 LTIP) was £2.1 million (2022: £2.0 million). The charge to the Income Statement in respect of share based payments in the year relating to grants of share options awarded under the New Share Plans, Long-term Option Plan (LTOP) and Restricted Share Plan (RSP), was £0.7 million and £0.2 million respectively. The charge to the Income Statement attributable to key management was £3.1 million (2022: £1.9 million). The charge to the reserves during the year in respect of employee share schemes was £4.5 million (2022: £8.7 million), resulting from the non-cash IFRS 2 charge for the year. There were nil exercisable share options at the end of the year (2022: nil). During the year 568,761 options vested under the 2011 LTIP (2022: 815,903) and 870,081 options lapsed (2022: 2,129,662). 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 vest is dependent on the shareholder return on equity and, for the Executive members, the remuneration caps in place. 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 September 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 £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 was 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. The fixed option price for tranches expected to vest from September 2022 to 2025 is now £5.30. 182 Berkeley Group 2023 Annual Report The key features of the plan are as follows: | 2016 | 2017 – 2018 | 2019 – 2021 | 2022 – 2025 | | --- | --- | --- | --- | | £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 | | | Original option price £16.34, reduced by amount of £2 return provided in dividend each year. Option price fixed at 30 September 2021 at £5.30. | | | £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: | | 2023 | | 2022 | | | --- | --- | --- | --- | --- | | | Option price per share £ | Number of options No. | Option price per share £ | Number of options No. | | As at 1 May | - | 4,349,689 | - | 7,295,254 | | Exercised during the year | 5.30 | (568,761) | 5.30 | (815,903) | | Total options lapsed during the year | - | (870,081) | - | (2,129,662) | | As at 30 April | - | 2,910,847 | - | 4,349,689 | The historic options vested, options banked and the option price are shown in the table below: | Vesting date | 2023 | | | | --- | --- | --- | --- | | | Option price £ | Share options vested No. | Options at 30 April 2023 | | 30 September 2016 | 10.00 | 5,719,166 | - | | 30 September 2017 | 8.63 | 892,487 | 1,163,737 | | 30 September 2018 | 7.73 | 990,955 | 1,231,409 | | 30 September 2019 | 7.46 | 926,265 | 1,202,514 | | 30 September 2020 | 5.39 | 836,466 | 1,096,471 | | 30 September 2021 | 5.30 | 815,903 | 982,628 | | 30 September 2022 | 5.30 | 568,761 | - | | Banked options vested | - | - | (568,761) | | Banked options lapsed | - | - | (2,197,151) | | Total | - | 10,750,003 | 2,910,847 | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 183 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED **2.5 Directors and employees** continued *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 as follows: | | Inputs | | --- | --- | | Grant date | 5 September 2011 | | Final vesting date | 30 September 2021 | | Share price at date of grant (p) | 1.236 | | Exercise price | £nil | | Discount rate | 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. **Long-Term Option Plan (LTOP)** The LTOP was approved by shareholders at the 2022 AGM. The LTOP is designed to incentivise management to deliver long-term performance and growth in shareholder value in line with the time horizon of the business strategy. Under the plan, eligible employees are granted a one-off grant of options with an exercise price at the higher of the share price at grant date and £48.50. Participation in the plan is at the discretion of the Remuneration Committee. Vesting will occur in five equal tranches between September 2026 and September 2030, with a holding restriction being in place until at least five years from grant. The exercise price of the options increases by £2.50 per year for vesting dates from September 2027 onwards. As such, a minimum exercise price on the options granted will be as follows, which is the only performance condition applied to the plan in addition to continued employment: | Vesting date | Minimum exercise price (prior to reductions for dividends) | | --- | --- | | 30 September 2026 | £48.50 | | 30 September 2027 | £51.00 | | 2 October 2028 | £53.50 | | 1 October 2029 | £56.00 | | 30 September 2030 | £58.50 | Each year the amount of options that vest is dependent on the growth in shareholder value driven by the minimum exercise price required to be achieved, adjusted for dividends or other distributions to shareholders and each employee's remuneration cap in place. Any options prevented from vesting due to the caps are lapsed. When exercised, each option is converted into one ordinary share on the vesting date. Sale restrictions are in place which provide a maximum of 10% of the cumulative balance of the shares earned to be sold each year. In the year 4,360,000 (2022: nil) LTOP awards were granted and were outstanding at 30 April 2023. **Restrictive Share Plan (RSP)** The RSP was approved by shareholders at the 2022 AGM. The RSP is designed to incentivise management to deliver long-term performance rather than in-year performance. The RSP is an annual restrictive share award with the first awards granted in September 2022, vesting in 2026 with a further one year holding period. Participation in the plan is at the discretion of the Remuneration Committee. Annual awards are determined by the Remuneration Committee, however the maximum number of shares under the RSP awards granted to participants will not exceed 175% of the salary of the CEO and 150% of the salary of all other Executive Directors. The vesting of awards is subject to remaining in service and the following two underpin conditions: i) In order for any of the award to vest, the average Return on Equity over the four prior financial years must be at least 15%, commencing with the financial year in which the RSP Awards are granted; and ii) Up to 20% of the award will be forfeited in the event of unsatisfactory progress against strategic and ESG priorities over the relevant vesting period. The vesting of awards is restricted to the level of each employee's remuneration cap. The remuneration cap is first applied to the LTOP to the extent that total remuneration would exceed the cap, followed by the RSP if required. Any RSP awards in excess of the total remuneration cap will lapse immediately. In the year 93,123 (2022: nil) RSP awards were granted and were outstanding at 30 April 2023. 184 Berkeley Group 2023 Annual Report ![img-15.jpeg](img-15.jpeg) # 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. # 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 2023 was £0.2 million (2022: £0.2 million). The total carrying amount of liabilities for share appreciation rights at the end of the year was £0.3 million (2022: £1.3 million), recorded in accruals and deferred income. # Pensions The Group accounts for pensions under IAS 19 'Employee Benefits'. The Group has both defined benefit and defined contribution plans. The defined benefit plan was closed to future accrual with effect from 1 April 2007. For the defined benefit scheme, the obligations are measured using the projected unit credit 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 £8.5 million (2022: £7.9 million) were paid into the defined contribution schemes during the year. There were £0.2 million of contributions outstanding to the scheme at 30 April 2023 (2022: £nil). # Defined benefit plan As at 30 April 2023, 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 154 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 30 April 2022 and the initial valuation results have been included below, with finalisation due by 31 July 2023. The method adopted in the 2022 valuation was the projected unit credit method, which assumed no allowance for over performance on investments both prior to and after retirement and inflation linked pension increases derived at each term using Black Scholes Methodology with a volatility assumption of 1.40% per annum. The market value of the Berkeley Final Salary Plan assets as at 1 May 2022 was £22.9 million and covered 117% of the scheme's liabilities. The Group made additional voluntary contributions of £0.6 million during the year (2022: £0.6 million). Berkeley Group 2023 Annual Report 185 Strategic Report Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED **2.5 Directors and employees** continued 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 respect of GMP equalisation with regard to members who transferred out of the scheme prior to the ruling. The plan has not yet completed a full review of the impact of GMP equalisation and no additional costs have been recognised during the year (2022: Enil). For the purpose of IAS 19, the 2022 valuation was updated for 30 April 2023. The most significant risks to which the plan exposes the Group are as follows: - 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. - Investment risk: There is a risk that future investment performance fails to generate expected returns. - Employer covenant risk: There is a risk that the strength of the employer covenant materially weakens which may impact the ability to support the fund. - 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Present value of defined benefit obligations | (14.5) | (19.1) | | Fair value of plan assets | 16.2 | 21.4 | | **Net surplus recognised in the Statement of Financial Position** | **1.7** | **2.3** | | --- | --- | --- | | | Defined benefit obligations | | Fair value plan assets | | Net defined benefit asset | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 £m | 2022 £m | 2023 £m | 2022 £m | 2023 £m | 2022 £m | | Balance at 1 May: | (19.1) | (23.2) | 21.4 | 26.4 | 2.3 | 3.2 | | Included in Income Statement: | | | | | | | | Net interest | (0.5) | (0.4) | 0.6 | 0.5 | 0.1 | 0.1 | | Included in Other Comprehensive Income: | | | | | | | | Re-measurements: | | | | | | | | Actuarial gain/(loss) arising from: | | | | | | | | — Demographic assumptions | 0.4 | 0.2 | — | — | 0.4 | 0.2 | | — Scheme experience | (0.1) | 0.1 | — | — | (0.1) | 0.1 | | — Financial assumptions | 4.3 | 2.9 | — | — | 4.3 | 2.9 | | Return on plan assets | — | — | (5.9) | (4.8) | (5.9) | (4.8) | | Other: | | | | | | | | Contributions by the employer | — | — | 0.6 | 0.6 | 0.6 | 0.6 | | Benefits paid out | 0.5 | 1.3 | (0.5) | (1.3) | — | — | | **Balance at 30 April** | **(14.5)** | **(19.1)** | **16.2** | **21.4** | **1.7** | **2.3** | 186 Berkeley Group 2023 Annual Report Cumulative actuarial gains and losses recognised in equity: | | 2023 £m | 2022 £m | | --- | --- | --- | | Cumulative amounts of losses recognised in the Statement of Comprehensive Income at 1 May | (6.4) | (4.8) | | Net actuarial loss recognised in the year | (1.3) | (1.6) | **Cumulative amounts of losses recognised in the Statement of Comprehensive Income at 30 April** (7.7) (6.4) The fair value of the assets was as follows: | | 30 April 2023 Long-term value £m | 30 April 2022 Long-term value £m | | --- | --- | --- | | Diversified growth fund | 3.2 | 5.1 | | Absolute return bonds | 4.1 | 7.7 | | Liquidity driven investment | 4.4 | 5.0 | | Corporate bonds | 1.7 | - | | Cash | 2.8 | 3.6 | | **Fair value of plan assets** | **16.2** | **21.4** | All equity securities and government bonds have quoted prices in active markets. All government bonds are issued by European Governments and are AAA- or AA- rated. All other plan assets are not quoted in an active market. *History of asset values* | | 30 April 2023 £m | 30 April 2022 £m | 30 April 2021 £m | 30 April 2020 £m | 30 April 2019 £m | | --- | --- | --- | --- | --- | --- | | Fair value of plan assets | 16.2 | 21.4 | 26.4 | 23.0 | 22.5 | | Present value of defined benefit obligations | (14.5) | (19.1) | (23.2) | (22.4) | (20.9) | | **Net surplus in the plan** | **1.7** | **2.3** | **3.2** | **0.6** | **1.6** | *Actuarial assumptions* The major assumptions used by the actuary for the 30 April 2023 valuation were as follows: | | 30 April 2023 | 30 April 2022 | | --- | --- | --- | | Discount rate | 4.85% | 3.00% | | Inflation assumption (RPI) | 3.40% | 3.80% | | Inflation assumption (CPI) | 2.85% | 3.30% | | Rate of increase in pensions in payment post 97 (pre-97 receive 3% p.a. increases) | 3.85% | 3.90% | The mortality assumptions are the standard S3PMA/S3PFA_M CMI_2021_X (1.25%) (2022: S3PMA/S3PFA_M CMI_2021_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 21.3 years and 23.3 years respectively (2022: 21.7 and 23.5 years respectively). The life expectancy of male and female deferred pensioners (now aged 45) retiring at age 65 after the Balance Sheet date is 22.6 years and 24.8 years respectively (2022: 22.9 and 25.0 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. | | Change in assumption | Change in defined benefit obligation | | --- | --- | --- | | Discount rate | +0.5% p.a. | £(0.8)m | | Rate of inflation | +0.25% p.a. | £0.2m | | Rate of mortality | +1 year | £0.5m | 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 2024, albeit it has no obligation to do so (2023: £0.6 million). Berkeley Group 2023 Annual Report 187 Strategic Report Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **2.6 Taxation** The Group applies IAS 12 'Income Taxes' in accounting for taxes on income. Income tax payable on taxable profits (current tax) is recognised as an expense in the periods in which the profits arise. In the autumn Budget 2021, a new 4% Residential Property Developer Tax (RPDT) was introduced which is effective from 1 April 2022. RPDT is intended to fund the cost of remedial cladding works borne by the Government and is treated as income tax. The taxation expense represents the sum of current tax payable and deferred tax including RPDT. Current tax and deferred tax are provided at the amounts expected to be paid (or received) using the tax rules and laws that have been enacted, or substantially enacted, by the reporting date. The tax charge for the year is as follows: | | 2023 £m | 2022 £m | | --- | --- | --- | | **Current tax including RPDT** | | | | UK current tax payable | (140.5) | (148.2) | | Adjustments in respect of previous years | (1.4) | 2.3 | | | (141.9) | (145.9) | | **Deferred tax including RPDT** | | | | Deferred tax movements | 2.5 | 73.0 | | Adjustments in respect of previous years | 1.1 | 3.8 | | | 3.6 | 76.8 | | | (138.3) | (69.1) | Tax on items recognised directly in equity is as follows: | | 2023 £m | 2022 £m | | --- | --- | --- | | Deferred tax in respect of employee share schemes (note 2.17) | (9.8) | 3.8 | Corporation tax is calculated at 19.5% (2022: 19.0%) of the estimated assessable profit for the year. With effect from 1 April 2022, the Group is subject to RPDT at a rate of 4%, and results in a weighted statutory rate of corporate income tax of 23.5% for the year (2022: 19.3%). The tax charge assessed for the year differs from the weighted statutory rate of corporate income tax of 23.5% (2022: 19.3%). The differences are explained below: | | 2023 £m | 2022 £m | | --- | --- | --- | | Profit before tax | 604.0 | 551.5 | | Tax on profit at standard UK corporation tax rate | 141.9 | 106.6 | | Effects of: | | | | – Expenses not deductible for tax purposes | 1.8 | 1.5 | | – Tax effect of share of results of joint ventures | (0.2) | (0.2) | | – Adjustments in respect of previous years | 0.3 | (6.1) | | – Effect of change in rate of tax (note 2.17) | (4.7) | (32.1) | | – Other | (0.8) | (0.6) | | Tax charge | 138.3 | 69.1 | The Group has an overall tax charge for the year of £138.3 million (2022: £69.1 million) including UK current tax payable of £140.5 million (2022: £148.2 million). The effective tax rate for the year is 22.9% (2022: 12.5%) and includes a £4.7 million credit arising from the re-measurement, in part, of the Group's UK deferred tax assets at 29% following the changes to both the corporation tax rate substantially enacted in May 2021 and the introduction of RPDT at a rate of 4% on 1 April 2022. 188 Berkeley Group 2023 Annual Report ## 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 | 2023 | 2022 | | --- | --- | --- | | Profit attributable to shareholders (£m) | **465.7** | 482.4 | | Weighted average no. of shares (million) | **109.1** | 115.5 | | Basic EPS (pence) | **426.8** | 417.8 | 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 2023, the Group had one (2022: one) category of dilutive ordinary shares: 1.0 million (2022: 1.6 million) share options under the 2011 LTIP. 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 | 2023 | 2022 | | --- | --- | --- | | Profit used to determine diluted EPS (million) | **465.7** | 482.4 | | Weighted average number of shares (million) | **109.1** | 115.5 | | Adjustments for: | | | | — Share options | **1.1** | 1.8 | | Shares used to determine diluted EPS (million) | **110.2** | 117.3 | | — Diluted EPS (pence) | **422.4** | 411.4 | ## 2.8 Intangible assets Where the cost of acquiring new and additional interests in subsidiaries, joint ventures and businesses exceeds the fair value of the net assets acquired, the resulting premium on acquisition (goodwill) is capitalised and its subsequent measurement is based on annual impairment reviews and impairment reviews performed where an impairment indicator exists, with any impairment losses recognised immediately in the Income Statement. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. | | Goodwill £m | | --- | --- | | **Cost:** | | | At 1 May 2022 and 30 April 2023 | **17.2** | | **Accumulated impairment:** | | | At 1 May 2022 and 30 April 2023 | **-** | | **Net book value:** | | | At 1 May 2022 and 30 April 2023 | **17.2** | | **Cost:** | | | At 1 May 2021 and 30 April 2022 | 17.2 | | Accumulated impairment: | | | At 1 May 2021 and 30 April 2022 | - | | Net book value: | | | At 1 May 2021 and 30 April 2022 | 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 13.5% (2022: 9.3%) 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. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 189 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **2.9 Property, plant and equipment** Property, plant and equipment is carried at historic purchase cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is provided to write off the cost of the assets on a straight line basis to their residual value over their estimated useful lives at the following annual rates: | Freehold buildings | 25 – 50 years | | --- | --- | | Fixtures, fittings and equipment | 3 – 12 years | | Motor vehicles | 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 de-recognised. 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. | | Freehold property £m | Fixtures, fittings & equipment £m | Motor vehicles £m | Total £m | | --- | --- | --- | --- | --- | | **Cost:** | | | | | | At 1 May 2022 | 30.5 | 21.0 | 1.9 | 53.4 | | Additions | 0.4 | 1.1 | 0.5 | 2.0 | | Disposals | – | (6.9) | (0.3) | (7.2) | | At 30 April 2023 | 30.9 | 15.2 | 2.1 | 48.2 | | **Accumulated depreciation:** | | | | | | At 1 May 2022 | 3.6 | 8.3 | 1.0 | 12.9 | | Charge for the year | 0.8 | 2.4 | 0.2 | 3.4 | | Disposals | – | (2.5) | (0.2) | (2.7) | | At 30 April 2023 | 4.4 | 8.2 | 1.0 | 13.6 | | **Net book value:** | | | | | | At 1 May 2022 | 26.9 | 12.7 | 0.9 | 40.5 | | At 30 April 2023 | 26.5 | 7.0 | 1.1 | 34.6 | | | Freehold property £m | Fixtures, fittings & equipment £m | Motor vehicles £m | Total £m | | --- | --- | --- | --- | --- | | **Cost:** | | | | | | At 1 May 2021 | 33.5 | 21.1 | 2.1 | 56.7 | | Additions | 0.1 | 1.0 | 0.2 | 1.3 | | Transfer to inventory | (3.1) | – | – | (3.1) | | Disposals | – | (1.1) | (0.4) | (1.5) | | At 30 April 2022 | 30.5 | 21.0 | 1.9 | 53.4 | | **Accumulated depreciation:** | | | | | | At 1 May 2021 | 3.3 | 6.3 | 1.1 | 10.7 | | Charge for the year | 0.7 | 2.9 | 0.2 | 3.8 | | Transfer to inventory | (0.4) | – | – | (0.4) | | Disposals | – | (0.9) | (0.3) | (1.2) | | At 30 April 2022 | 3.6 | 8.3 | 1.0 | 12.9 | | **Net book value:** | | | | | | At 1 May 2021 | 30.2 | 14.8 | 1.0 | 46.0 | | At 30 April 2022 | 26.9 | 12.7 | 0.9 | 40.5 | 190 Berkeley Group 2023 Annual Report ## 2.10 Right-of-use assets and lease liabilities 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 re-measurements 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. | | Leasehold property £m | Motor vehicles £m | Total £m | | --- | --- | --- | --- | | **Cost:** | | | | | At 1 May 2022 | 10.6 | 0.7 | 11.3 | | Additions | 2.1 | 0.1 | 2.2 | | Disposals | (0.6) | – | (0.6) | | At 30 April 2023 | 12.1 | 0.8 | 12.9 | | **Accumulated depreciation:** | | | | | At 1 May 2022 | 5.0 | 0.5 | 5.5 | | Charge for the year | 2.4 | 0.1 | 2.5 | | Disposals | (0.3) | – | (0.3) | | At 30 April 2023 | 7.1 | 0.6 | 7.7 | | **Net book value:** | | | | | At 1 May 2022 | 5.6 | 0.2 | 5.8 | | At 30 April 2023 | 5.0 | 0.2 | 5.2 | Lease liabilities included in the Consolidated Statement of Financial Position: | | 2023 £m | 2022 £m | | --- | --- | --- | | Current | 2.2 | 2.1 | | Non-current | 2.9 | 3.8 | | **Total** | **5.1** | **5.9** | Amounts recognised in the Consolidated Income Statement: | | 2023 £m | 2022 £m | | --- | --- | --- | | Depreciation charged on right-of-use assets – Office buildings | 2.4 | 1.7 | | Depreciation charged on right-of-use assets – Motor vehicles | 0.1 | 0.1 | | Interest on lease liabilities | 0.1 | 0.1 | | **Total** | **2.6** | **1.9** | The total cash outflow for leases in 2023 was £2.3 million (2022: £1.9 million). Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 191 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **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. | | 2023 £m | 2022 £m | | --- | --- | --- | | Loans | 40.9 | 29.3 | | Share of post acquisition reserves | 182.5 | 161.1 | | | **223.4** | **190.4** | Details of the joint ventures are provided in notes 2.25 and 2.26. | | 2023 £m | 2022 £m | | --- | --- | --- | | At 1 May | 190.4 | 281.7 | | Group's share of profit after taxation for the year | 96.3 | 56.1 | | Increase in loans to joint ventures | 11.6 | 26.7 | | Dividends from joint ventures (St Edward) | (74.9) | - | | Disposal of equity share in joint venture | - | (174.1) | | **At 30 April** | **223.4** | **190.4** | The disposal in 2022 relates to the acquisition of the outstanding 50% partnership interest in St William Homes LLP, following which St William Homes LLP is a wholly owned subsidiary of the Berkeley Group. The Group recognised its 50% share of St William Homes LLP's profit up to acquisition date of 15 March 2022. Subsequently, 100% of St William Homes LLP's Income Statement is included within the Consolidated Income Statement. The Group's share of joint ventures' net assets, income and expenses is comprised as follows: | 2023 | St Edward £m | St William £m | Other £m | Total £m | | --- | --- | --- | --- | --- | | Cash and cash equivalents | 248.6 | - | 0.2 | 248.8 | | Other current assets | 412.0 | - | 35.9 | 447.9 | | Current assets | 660.6 | - | 36.1 | 696.7 | | Current liabilities | (236.4) | - | (0.1) | (236.5) | | Non-current financial liabilities* | (58.8) | - | (36.4) | (95.2) | | Net assets/(liabilities) (at 100%) | 365.4 | - | (0.4) | 365.0 | | Group share of net assets/(liabilities) (50%) | 182.7 | - | (0.2) | 182.5 | | Loans to joint ventures | 22.6 | - | 18.3 | 40.9 | | **Total interest in joint ventures** | **205.3** | **-** | **18.1** | **223.4** | | Revenue | 534.4 | - | (0.1) | 534.3 | | Costs | (344.5) | - | (0.4) | (344.9) | | Operating profit/(loss) | 189.9 | - | (0.5) | 189.4 | | Net finance income/(costs) | 4.1 | - | (0.1) | 4.0 | | Profit/(loss) before taxation for the year | 194.0 | - | (0.6) | 193.4 | | Tax charge | (0.8) | - | - | (0.8) | | Profit/(loss) after taxation and total comprehensive income/(expense) (100%) | 193.2 | - | (0.6) | 192.6 | | Group share of post tax profit/(loss) of joint ventures (50%) | 96.6 | - | (0.3) | 96.3 | During the year, the Group entered into a new 50/50 joint venture agreement with Latimer Developments Ltd (2022: SEGRO Properties Limited). The other joint ventures in the table comprise asset venture specific 50/50 joint ventures - Latimer Developments Ltd and SEGRO Properties Limited. * Non-current liabilities include amounts owed to joint venture partners 192 Berkeley Group 2023 Annual Report | 2022 | St Edward £m | St William £m | Other £m | Total £m | | --- | --- | --- | --- | --- | | Cash and cash equivalents | 251.0 | - | - | 251.0 | | Other current assets | 594.7 | - | 13.4 | 608.1 | | Current assets | 845.7 | - | 13.4 | 859.1 | | Current liabilities | (440.2) | - | - | (440.2) | | Non-current financial liabilities* | (83.3) | - | (13.4) | (96.7) | | Net assets (at 100%) | 322.2 | - | - | 322.2 | | Group share of net assets (50%) | 161.1 | - | - | 161.1 | | Loans to joint ventures | 22.6 | - | 6.7 | 29.3 | | Total interest in joint ventures | 183.7 | - | 6.7 | 190.4 | | Revenue | 279.6 | 262.4 | - | 542.0 | | Costs | (192.8) | (224.7) | - | (417.5) | | Operating profit | 86.8 | 37.7 | - | 124.5 | | Net finance income/(costs) | 0.6 | (12.3) | - | (11.7) | | Profit before taxation for the year | 87.4 | 25.4 | - | 112.8 | | Tax charge | (0.5) | - | - | (0.5) | | Profit after taxation and total comprehensive income (100%) | 86.9 | 25.4 | - | 112.3 | | Group share of post tax profit of joint ventures (50%) | 43.4 | 12.7 | - | 56.1 | * Non-current liabilities include amounts owed to joint venture partners Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 193 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **2.12 Inventories** Property in the course of development and completed units are valued at the lower of cost and net realisable value. Direct cost comprises the cost of land, raw materials and development costs but excludes indirect overheads. Provision is made, where appropriate, to reduce the value of inventories and work in progress to their net realisable value. Land purchased for development, including land in the course of development, is initially recorded at cost. Where such land is purchased on deferred settlement terms, and the cost differs from the amount that will subsequently be paid in settling the liability, this difference is charged as a finance cost in the Income Statement over the period to settlement. 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 in determining each site's margin which is used to estimate cost of sales when revenue is recognised for each unit, 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 all 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. An increase or decrease to estimated costs recognised in the year, by virtue of a 1% change to forecast development margin, would lead to a change in cost of sales and inventory of £17.6 million in the current financial year (2022: £16.3 million). 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 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 is 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 2023, 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 4% (2022: 5%) of the future estimated revenue for the specific sites. As with all judgements involving estimation over a long-term horizon, the outcome of future events may affect the eventual accounting outcome. | | 2023 £m | 2022 £m | | --- | --- | --- | | Land not under development | 927.1 | 738.1 | | Work in progress: Land cost | 1,729.2 | 1,952.5 | | Total land | 2,656.3 | 2,690.6 | | Work in progress: Build cost | 2,520.0 | 2,302.6 | | Completed units | 125.8 | 140.8 | | Total inventories | 5,302.1 | 5,134.0 | The key areas of estimation uncertainty described above are relevant to the work in progress and completed stock balances as at 30 April 2023. During the prior year, inventory of £1,146.2 million was acquired through the acquisition of the outstanding 50% partnership interest in St William. 194 Berkeley Group 2023 Annual Report ## 2.13 Trade and other receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 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 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. | | 2023 £m | 2022 £m | | --- | --- | --- | | Trade receivables | 48.2 | 45.9 | | Other receivables | 22.1 | 81.9 | | Prepayments and accrued income | 22.0 | 17.9 | | | **92.3** | **145.7** | Included within other receivables are VAT amounts recoverable in the ordinary course of business. Further disclosures relating to trade receivables are set out in note 2.23. ## 2.14 Cash and cash equivalents Cash and cash equivalents comprise 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. | | 2023 £m | 2022 £m | | --- | --- | --- | | Cash and cash equivalents | 1,070.4 | 928.9 | ## 2.15 Trade and other payables 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 as control is passed to the customer, which has either been determined as the point of legal completion or, on contracts where the customer controls the property during construction, over time with reference to the stage of completion. | | 2023 £m | 2022 £m | | --- | --- | --- | | **Current** | | | | Trade payables | (602.6) | (635.5) | | Deposits and on account contract receipts | (921.3) | (931.4) | | Other taxes and social security | (12.3) | (25.6) | | Deferred income | (88.4) | (148.3) | | Accruals | (177.0) | (164.1) | | | **(1,801.6)** | **(1,904.9)** | | **Non-current** | | | | Trade payables | (863.4) | (719.8) | | **Total trade and other payables** | **(2,665.0)** | **(2,624.7)** | The reduction in deferred income of £59.9 million in the year has been recorded as revenue in the Income Statement. Berkeley Group 2023 Annual Report 195 Strategic Report Corporate Governance Financial Statements # NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED ## 2.15 Trade and other payables continued All amounts included above are unsecured. The total of £12.3 million (2022: £25.6 million) for other taxes and social security includes £6.2 million (2022: £9.0 million) for Employer's National Insurance provision in respect of share based payments. Further disclosures relating to current trade and non-current trade payables are set out in note 2.23. ## 2.16 Provisions for liabilities and charges Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle that obligation, and the amount has been reliably estimated. The Group makes assumptions to determine the timing and its best estimate of the quantum of its construction and other liabilities for which provisions are held. Provisions include a best estimate of the expected value of its 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, including matters relating to building fire-safety, but which are uncertain in terms of timing and quantum. Provisions are discounted to present value where the effect is material. 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 including matters relating to building fire-safety. 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 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 £19.4 million in the current financial year (2022: £16.1 million). | | Post completion development provisions £m | Other provisions £m | Total £m | | --- | --- | --- | --- | | At 1 May 2022 | (157.2) | (3.8) | (161.0) | | Utilised | 19.3 | 0.3 | 19.6 | | Released | 9.0 | 0.3 | 9.3 | | Charged to the Income Statement | (60.1) | (1.4) | (61.5) | | **At 30 April 2023** | **(189.0)** | **(4.6)** | **(193.6)** | | | Post completion development provisions £m | Other provisions £m | Total £m | | --- | --- | --- | --- | | At 1 May 2021 | (124.7) | (3.4) | (128.1) | | Utilised | 31.0 | 0.7 | 31.7 | | Released | 10.1 | 0.7 | 10.8 | | Increase on acquisition of St William | (7.6) | - | (7.6) | | Charged to the Income Statement | (66.0) | (1.8) | (67.8) | | **At 30 April 2022** | **(157.2)** | **(3.8)** | **(161.0)** | | | 2023 £m | 2022 £m | | --- | --- | --- | | Non-current | (115.1) | (98.5) | | Current | (78.5) | (62.5) | | **Total** | **(193.6)** | **(161.0)** | 196 Berkeley Group 2023 Annual Report ## 2.17 Deferred tax Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit, and is accounted for using the Balance Sheet liability method. Deferred tax liabilities are generally recognised on all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill, or from the initial recognition (except in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, or from differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred taxation is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the Balance Sheet date. The carrying value of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which taxable temporary differences can be utilised. Deferred taxation is charged or credited to the Income Statement, except when it relates to items charged or credited directly to reserves, in which case the deferred taxation is also dealt with in reserves. Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxation assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. The movement on the deferred tax account is as follows: | | Accelerated capital allowances £m | Other timing differences £m | Total £m | | --- | --- | --- | --- | | At 1 May 2022 | (4.5) | 125.2 | 120.7 | | Adjustments in respect of previous years | - | 1.1 | 1.1 | | Credited/(charged) to the Income Statement in the year | 0.1 | (2.3) | (2.2) | | Adjustment in respect of change of tax rate for future periods (note 2.6) | 0.2 | 4.5 | 4.7 | | **Credited to Income Statement in the year** | **0.3** | **2.2** | **2.5** | | **Charged to equity in year (note 2.6)** | **-** | **(9.8)** | **(9.8)** | | **At 30 April 2023** | **(4.2)** | **118.7** | **114.5** | | | Accelerated capital allowances £m | Other timing differences £m | Total £m | | --- | --- | --- | --- | | At 1 May 2021 | (2.9) | 43.0 | 40.1 | | Adjustments in respect of previous years | (0.2) | 4.0 | 3.8 | | **Credited to the Income Statement in the year** | **0.2** | **40.7** | **40.9** | | Adjustment in respect of change of tax rate for future periods (note 2.6) | (1.6) | 33.7 | 32.1 | | (Charged)/credited to Income Statement in the year | (1.4) | 74.4 | 73.0 | | Credited to equity in year (note 2.6) | - | 3.8 | 3.8 | | **At 30 April 2022** | **(4.5)** | **125.2** | **120.7** | Other timing differences primarily relates to deferred tax assets held in relation to acceleration of trading profits arising on the acquisition of St William during the prior financial year, long-term incentive schemes and bonuses. Deferred tax is calculated in full on temporary differences at the tax rates that are expected to apply for the period when the asset is realised and the liability is settled. The deferred tax credit for the full year includes a £4.7 million credit arising from the re-measurement, in part, of the Group's UK deferred tax assets at 29% following the changes to both the corporation tax rate substantially enacted in May 2021 and the introduction of RPDT on 1 April 2022. All deferred tax assets are available for offset against deferred tax liabilities and hence the net deferred tax asset at 30 April 2023 is £114.5 million (2022: £120.7 million). Deferred tax assets of £80.6 million (2022: £95.8 million) are expected to be recovered after more than one year. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 197 # NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED ## 2.17 Deferred tax continued 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 there will be sufficient available profits to offset all or part of the asset. There are no unrecognised deferred tax assets as at 30 April 2023. The deferred tax credited to equity during the year was as follows: | | 2023 £m | 2022 £m | | --- | --- | --- | | Deferred tax movement in the year in respect of employee share schemes (note 2.6) | (9.8) | 3.8 | | Cumulative deferred tax credited to equity at 1 May | 26.1 | 22.3 | | **Cumulative deferred tax credited to equity at 30 April** | **16.3** | **26.1** | ## 2.18 Share capital and share premium Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled, sold or reissued. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders. The movements on allotted and fully paid share capital for the Company in the year were as follows: | | Ordinary shares | | Share capital | | Share premium | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 No '000 | 2022 No '000 | 2023 £m | 2022 £m | 2023 £m | 2022 £m | | Issued | | | | | | | | At start of year | 120,590 | 132,237 | 6.5 | 6.6 | 49.8 | 49.8 | | Shares cancelled | (4,053) | (1,531) | (0.2) | (0.1) | - | - | | Share consolidation | - | (10,116) | - | - | - | - | | **At end of year** | **116,537** | **120,590** | **6.3** | **6.5** | **49.8** | **49.8** | During the 2023 financial year, 4.0 million shares were repurchased (2022: 1.5 million) for a total consideration of £155.4 million, excluding transaction costs (2022: £63.7 million). These shares were subsequently cancelled. Each ordinary share of 5.4141 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 28 September 2022, 0.3 million ordinary shares (2022: 0.5 million) were allotted and issued to the Employee Benefit Trust. On 30 September 2022, 0.3 million ordinary shares (2022: 0.5 million) were transferred from the Employee Benefit Trust to Executive Directors to satisfy the exercise of options under the 2011 LTIP. At 30 April 2023, there were 0.1 million shares held in trust (2022: 0.1 million) by the Employee Benefit Trust. The market value of these shares at 30 April 2023 was £4.6 million (2022: £3.0 million). At 30 April 2023, there were 8.9 million (2022: 9.2 million) treasury shares held by the Group. The market value of the shares at 30 April 2023 was £398.4 million (2022: £376.8 million). In the prior year in order to complete the Surplus Capital Return, 136.6 million B-Shares were issued at a nominal value of 0.1 pence per share. These were subsequently repurchased and cancelled. Following the Surplus Capital Return, a share consolidation was undertaken which reduced the Company's ordinary share capital, net of treasury and Employee Benefit Trust shares, by 7.65%. The share consolidation replaced the total number of existing ordinary shares of 132.3 million, with a nominal value of 5 pence each, into a reduced number of new ordinary shares of 122.1 million, each at a nominal value of 5.4141 pence at the time of the consolidation. 198 Berkeley Group 2023 Annual Report ## 2.19 Reserves The movement in reserves is set out in the Consolidated Statement of Changes in Equity on page 176. ### 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, 4.0 million (2022: 1.5 million) shares were repurchased to the value of £155.4 million (2022: £63.7 million). These shares were subsequently cancelled (2022: 1.5 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 (2022: 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 28 September 2022, the Company allotted and issued to the Employee Benefit Trust 0.3 million ordinary shares (2022: 0.5 million ordinary shares). On 30 September 2022, 0.3 million ordinary shares were transferred from the Employee Benefit Trust to Executive Directors to satisfy the exercise of options under the 2011 LTIP (2022: 0.5 million ordinary shares). ## 2.20 Dividends per share Dividend distributions to shareholders are recognised as a liability in the period in which the dividends are appropriately authorised and approved for payout and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements. | | 2023 | | 2022 | | | --- | --- | --- | --- | --- | | | Dividend per share pence | £m | Dividend per share pence* | £m | | Amounts recognised as distributions to equity shareholders during the year: | | | | | | September 2021 – Surplus Capital Return | - | - | 371.00 | 451.5 | | September 2022 | 21.25 | 23.3 | - | - | | March 2023 | 69.44 | 75.2 | - | - | | **Total dividends** | | **98.5** | | **451.5** | * Surplus Capital Return paid to shareholders via B-Share Scheme ## 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 £28.5 million which are guaranteed by third parties (2022: £29.4 million). The Group considers that the likelihood of an outflow of cash under these agreements is low and that no provision is required. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 199 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **2.22 Notes to the Consolidated Cash Flow Statement** Reconciliation of profit after taxation for the year to cash generated from operations: | | 2023 £m | 2022 £m | | --- | --- | --- | | Profit for the financial year | 465.7 | 482.4 | | Adjustments for: | | | | — Taxation | 138.3 | 69.1 | | — Depreciation | 5.1 | 5.6 | | — Loss on sale of property, plant and equipment | 3.7 | 0.1 | | — Finance income | (23.1) | (2.5) | | — Finance costs | 33.7 | 15.0 | | — Share of results of joint ventures after tax | (96.3) | (56.1) | | — Non-cash charge in respect of share awards | (4.5) | (8.6) | | Changes in working capital: | | | | Increase in inventories | (168.1) | (332.5) | | Decrease/(increase) in trade and other receivables | 57.5 | (61.0) | | Increase in trade and other payables | 60.5 | 260.9 | | Cash generated from operations | 472.5 | 372.4 | | Reconciliation of net cash flow to net cash: | | | | Net increase/(decrease) in cash and cash equivalents, including bank overdraft | 141.5 | (499.3) | | Increase in borrowings | - | (660.0) | | Decrease in borrowings | - | 300.0 | | Movement in net cash in the financial year | 141.5 | (859.3) | | Opening net cash | 268.9 | 1128.2 | | Closing net cash | 410.4 | 268.9 | | Net cash as at 30 April: | | | | Cash and cash equivalents | 1,070.4 | 928.9 | | Non-current borrowings | (660.0) | (660.0) | | Total borrowings | (660.0) | (660.0) | | Net cash* | 410.4 | 268.9 | \* IFRS 16 lease liabilities are detailed in note 2.10. In the prior year the £412.5 million consideration for National Grid's 50% share of St William has been shown as a cash flow from operating activities in line with the accounting for the transaction as an asset acquisition, net of £56.9 million of cash held by St William at the date of acquisition. The changes in working capital above reflect the underlying Group cash flows, excluding the impact of the acquisition of St William in the year. Concurrent with the acquisition, Berkeley refinanced the St William bank borrowings which resulted in a £185.0 million settlement of St William debt, which is presented in financing cash flows. # **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. 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 2023 was £2,921.9 million (2022: £2,867.2 million). The increase in capital employed in the year of £54.7 million reflects an increase in net assets during the year (2022: increase of £820.0 million). 200 Berkeley Group 2023 Annual Report 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 represented by floating borrowings 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Current: | | | | Trade receivables | 48.2 | 45.9 | | Loans to joint ventures | 40.9 | 29.3 | | Cash and cash equivalents | 1,070.4 | 928.9 | | **Total financial assets** | **1,159.5** | **1,004.1** | Trade receivables are non-interest bearing. Of the current trade receivables balance of £48.2 million (2022: £45.9 million) none of the balance was overdue by more than 30 days (2022: £nil). Cash and cash equivalents are short-term deposits held at either floating rates linked to the Bank of England base rate or fixed rates. There are currently no Group assets that are measured at fair value. # Financial instruments: financial liabilities The Group's financial liabilities can be summarised as follows: | | 2023 £m | 2022 £m | | --- | --- | --- | | **Current** | | | | Trade payables | (614.9) | (661.1) | | Deposits and on account contract receipts | (921.3) | (931.4) | | Lease liabilities | (2.2) | (2.1) | | Deferred income | (88.4) | (148.3) | | Accruals | (177.0) | (164.1) | | | **(1,803.8)** | **(1,907.0)** | | **Non-current** | | | | Trade payables | (863.4) | (719.8) | | Lease liabilities | (2.9) | (3.8) | | Borrowings | (660.0) | (660.0) | | | **(1,526.3)** | **(1,383.6)** | | **Total trade and other payables** | **(3,330.1)** | **(3,290.6)** | All amounts included above are unsecured. 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Amounts due: | | | | In more than one year but not more than two years | (202.6) | (31.8) | | In more than two years but not more than five years | (1,033.5) | (1,054.8) | | In more than five years | (290.2) | (297.0) | | | **(1,526.3)** | **(1,383.6)** | The carrying amounts of the Group's financial assets and financial liabilities approximate their fair value. Berkeley Group 2023 Annual Report 201 Strategic Report Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **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, on initial recognition of the financial liability, applied to the maturity profile of the individual land creditors within the total. Non-current bank loans approximate to fair value as they are held at variable market interest rates. The fair value of the £400 million unsecured 10-year Green Bonds at 30 April 2023 was determined by the ask price of £69.12 per £100 (2022: £83.66 per £100). # **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: | | 2023 £m | 2022 £m | | --- | --- | --- | | Amounts due: | | | | In less than one year | (870.3) | (949.9) | | In more than one year but not more than two years | (204.6) | (32.4) | | In more than two years but not more than five years | (1,051.3) | (1,065.4) | | In more than five years | (319.0) | (332.7) | | | (2,445.2) | (2,380.4) | Deposits and on account contract receipts are not included in the table above as they represent deferred income 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 2023, profit after tax for the year would have been £1.3 million higher (2022: £3.3 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 2023. # **Credit risk** The Group's exposure to credit risk encompasses the financial assets being: trade receivables, loans to joint ventures and cash and cash equivalents. The Group has assessed expected credit losses and the loss allowance for trade and other receivables and loans to joint ventures as immaterial. There has been no impairment of trade receivables during the year (2022: £nil), nor are there any material provisions held against trade receivables (2022: £nil), and £nil trade receivables are past their due date (2022: £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. 202 Berkeley Group 2023 Annual Report # 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: | | 2023 | | | | 2022 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Available £m | Drawn/ Issued £m | Undrawn £m | Available £m | Available £m | Drawn/ Issued £m | Undrawn £m | Available £m | | **Bank facilities** | | | | | | | | | | Green term loan | 260 | (260) | - | Feb-28 | 260 | (260) | - | Feb-27 | | Revolving credit facility | 540 | - | 540 | Feb-28 | 540 | - | 540 | Feb-27 | | **Listed debt** | | | | | | | | | | Green Bonds | 400 | (400) | - | Aug-31 | 400 | (400) | - | Aug-31 | | | 1,200 | (660) | 540 | | 1,200 | (660) | 540 | | The Group's committed borrowing facilities of £1,200 million are unchanged from the prior year. The £400 million unsecured 10-year Green Bonds mature in August 2031 at a fixed coupon of 2.5% per annum. These are listed on the International Securities Market of the London Stock Exchange plc. The notes have financial covenants with all of which the Group is in compliance. The £800 million banking facilities comprise a £260 million Green Term Loan, which was drawn down in March 2022 and bears interest at a rate linked to SONIA plus a fixed margin, and a £540 million Revolving Credit Facility (RCF) which remains undrawn. In February 2023, we exercised the first of the two one year extensions on the £800 million banking facilities, which consequently is in place to February 2028, with one extension option remaining. The committed bank 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. At 30 April 2023, the total drawn balance of the combined borrowing facilities was £660.0 million (2022: £660.0 million). At 30 April 2023 there were no bank bonds in issue (2022: £9.4 million, all due within one year). This amount reflects deferred land payments and is included within trade payables on the Group's Balance Sheet. The bank bonds are issued under ancillary facilities available as part of the Group's RCF. ### 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. | | 2023 | 2022 | | --- | --- | --- | | Net assets (£m) | 3,332.3 | 3,136.1 | | Total shares in issue (million) | 116.5 | 120.6 | | Less: | | | | Treasury shares held (million) | (8.9) | (9.2) | | Employee Benefit Trust shares held (million) | (0.1) | (0.1) | | Net shares used to determine NAVPS (million) | 107.5 | 111.3 | | Net asset per share attributable to shareholders (pence) | 3,100.5 | 2,818.2 | Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 203 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED # **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. | | 2023 £m | 2022 £m | | --- | --- | --- | | Operating profit | 518.3 | 507.9 | | Share of joint ventures using equity method | 96.3 | 56.1 | | Profit used to determine ROCE | 614.6 | 564.0 | | Opening capital employed: | | | | Net assets | 3,136.1 | 3,175.4 | | Net cash | (268.9) | (1,128.2) | | Opening capital employed | 2,867.2 | 2,047.2 | | Closing capital employed: | | | | Net assets | 3,332.3 | 3,136.1 | | Net cash | (410.4) | (268.9) | | Closing capital employed | 2,921.9 | 2,867.2 | | Average capital employed | 2,894.5 | 2,457.2 | | Return on capital employed (%) | 21.2% | 23.0% | # **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. | | 2023 £m | 2022 £m | | --- | --- | --- | | Opening shareholders' equity | 3,136.1 | 3,175.4 | | Closing shareholders' equity | 3,332.3 | 3,136.1 | | Average shareholders' equity | 3,234.2 | 3,155.8 | | Profit before tax | 604.0 | 551.5 | | Return on equity before tax (%) | 18.7% | 17.5% | # **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, commercial properties and institutional sales as well as 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. # **2.25 Related party transactions** The Group has entered into the following related party transactions: # **Transactions with Directors** During the year, Mr R C Perrins paid £115,808 (2022: £57,703) to the Group in connection with works carried out at his home at commercial rates in accordance with the relevant policies of the Group. There were no balances outstanding at either year end. # **Transactions with joint ventures** During the financial year, the joint ventures paid management fees and other recharges to the Group of £18.0 million (2022: £40.2 million). Other transactions in the year include the movements in loans of £11.6 million (2022: £26.7 million) and the receipt of dividends of £74.9 million (2022: £nil). The outstanding loan balances with joint ventures at 30 April 2023 total £40.9 million (30 April 2022: £29.3 million). 204 Berkeley Group 2023 Annual Report Corporate Governance Financial StatementsStrategic Report 205Berkeley Group 2023 Annual Report 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 2023 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, unless otherwise stated, and the principal activity is residential- led mixed use development and ancillary activities. All of the companies are wholly owned by the Group and unless otherwise indicated, all of the companies have ordinary share capital. Agents of Berkeley Commercial Developments Limited Ely Business Park Limited Agents of Berkeley Homes (Central London) Limited Chelsea Bridge Wharf (Block A) Limited Chelsea Bridge Wharf (Block B) Limited Chelsea Bridge Wharf (Block P) Limited Chelsea Bridge Wharf (C North) Limited Chelsea Bridge Wharf (C South) Limited Agents of Berkeley Homes (Hampshire) Limited Berkeley Homes (South Western House No. 1) Limited Agents of Berkeley Homes Public Limited Company 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) Public Limited Company 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 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 (viii) St Joseph Homes Limited Stanmore Relocations Limited Tabard Square (Building C) Limited Agents of Berkeley Twenty Limited Thirlstone Homes (Western) Limited Thirlstone Homes Limited Agents of St George Central London Limited Castle Court Putney Wharf Limited Imperial Wharf (Block C) Limited Imperial Wharf (Block J) Ltd Imperial Wharf (Riverside Tower) Residential Limited Agents of St George plc St George Central London Limited St George City Limited St George Developments Limited St George Kings Cross Limited St George North London Limited St George South and Central London Limited St George South London Limited (vii) St George West London Ltd (ii) Agents of St George South London Ltd 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 ## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 2.26 Subsidiaries and joint ventures continued (a) Subsidiaries continued 206 Berkeley Group 2023 Annual Report 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 Agents of St John Homes Limited Berkeley Sixty-Six Limited Non-Agency Companies (v) Ancestral Homes Limited Berkeley (Inner-City Partnerships) Limited Berkeley (SQP) Limited Berkeley (Virginia Water) Limited (i) Berkeley Affordable Homes Limited Berkeley Asset MSA Limited Berkeley College Homes Limited 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 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 (Hertfordshire & Cambridgeshire) Limited Berkeley Homes (Kent) Limited Berkeley Homes (North Western) Limited (i) Berkeley Homes (PCL) Limited Berkeley Homes (South) Limited Berkeley Homes (Southall) Limited Berkeley Homes (Stanmore) Limited Berkeley Homes (Southern Counties) Limited Berkeley Homes Group Limited Berkeley Homes Public Limited Company (iii) (viii) Berkeley London Residential Limited Berkeley Manhattan Limited Berkeley Ninety-Eight Limited Berkeley Ninety-Five Limited Berkeley Ninety-Nine Limited Berkeley Ninety-Seven Limited Berkeley Ninety-Six Limited Berkeley Number Four Limited Berkeley Number Seven Limited Berkeley Number Six Limited Berkeley One Hundred and Eight Limited Berkeley One Hundred and Eighteen Limited Berkeley One Hundred and Eighty-Eight Limited Berkeley One Hundred and Eighty-Five Limited Berkeley One Hundred and Eighty Limited Berkeley One Hundred and Eighty-Nine Limited Berkeley One Hundred and Eighty-One Limited Berkeley One Hundred and Eighty-Seven Limited Berkeley One Hundred and Eighty-Two Limited Berkeley One Hundred and Fifteen Limited Berkeley One Hundred and Fifty-Eight Limited Berkeley One Hundred and Fifty-Five Limited Berkeley One Hundred and Fifty-Four Limited Berkeley One Hundred and Fifty Limited Berkeley One Hundred and Fifty-Nine Limited Berkeley One Hundred and Fifty-One Limited Berkeley One Hundred and Fifty-Seven Limited Berkeley 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 Corporate Governance Financial StatementsStrategic Report 207Berkeley Group 2023 Annual Report 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 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 Seventy-Two Limited Berkeley One Hundred and Six Limited Berkeley One Hundred and Sixteen Limited Berkeley One Hundred and Sixty-Five Limited Berkeley One Hundred and Sixty-Four Limited Berkeley One Hundred and Sixty-One Limited Berkeley One Hundred and Sixty-Six Limited Berkeley One Hundred and Sixty-Three Limited Berkeley 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 Residential Limited (i) Berkeley Ryewood Limited Berkeley Seventy Limited Berkeley Seventy-Four Limited Berkeley Seventy-One plc (vii) Berkeley Seventy-Seven Limited Berkeley Seventy-Six Limited Berkeley Seventy-Three Limited 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 Fifty Limited Berkeley Two Hundred and Fifty-Eight Limited Berkeley Two Hundred and Fifty-Five Limited Berkeley Two Hundred and Fifty-Four Limited Berkeley Two Hundred and Fifty-Nine Limited Berkeley Two Hundred and Fifty-One Limited Berkeley Two Hundred and Fifty-Seven Limited Berkeley Two Hundred and Fifty-Six Limited Berkeley Two Hundred and Fifty-Three Limited Berkeley Two Hundred and Fifty-Two Limited Berkeley Two Hundred and Five Limited Berkeley Two Hundred and Forty Limited Berkeley Two Hundred and Forty-Eight Limited Berkeley Two Hundred and Forty-Five Limited Berkeley Two Hundred and Forty-Four Limited Berkeley Two Hundred and Forty-Nine Limited Berkeley Two Hundred and Forty-One Limited Berkeley Two Hundred and Forty-Seven Limited Berkeley Two Hundred and Forty-Six Limited Berkeley Two Hundred and Forty-Three Limited Berkeley Two Hundred and Forty-Two Limited Berkeley Two Hundred and Fourteen Limited ## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 2.26 Subsidiaries and joint ventures continued (a) Subsidiaries continued 208 Berkeley Group 2023 Annual Report 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 Sixty Limited Berkeley Two Hundred and Thirteen Limited Berkeley Two Hundred and Thirty Limited Berkeley Two Hundred and Thirty-Eight Limited Berkeley Two Hundred and Thirty-Five Limited Berkeley Two Hundred and Thirty-Four Limited Berkeley Two Hundred and Thirty-Nine Limited Berkeley Two Hundred and Thirty-One Limited Berkeley Two Hundred and Thirty-Seven Limited Berkeley Two Hundred and Thirty-Six Limited Berkeley Two Hundred and Thirty-Three Limited Berkeley Two Hundred and Thirty-Two 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-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 (viii) Bromyard House (Car Park) Limited Bromyard House (Freehold) Limited Bromyard House (North) Limited Bromyard House Limited BWW Management Limited (viii) Charco 143 Limited (i) Chelsea Bridge Wharf (Management Company) Limited Chelsea Bridge Wharf Car Park Limited (viii) Community Housing Action Limited Community Villages Limited CPWGCO 1 Limited Drummond Road (Number 1) Ltd Drummond Road (Number 2) Ltd 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 Paddington Green Propco 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 (viii) 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 Ltd St. George Inner Cities Ltd St. George Investments Ltd St. George London Ltd St George Northfields Limited St. George Partnerships Ltd St George plc (iv) St George Project Management Limited St. George Properties Ltd St George Real Estate Limited St George Regeneration Limited St. George Southern Ltd St. George Western Ltd St George Wharf Hotel Limited St. George’s Hill Property Company Limited St James Group Limited St James Homes (Grosvenor Dock) Limited St James Homes Limited (viii) St William Eight Limited St William Eighteen Limited St William Eleven Limited St William Fifteen Limited St William Five Limited St William Four Ltd St William Fourteen Limited St William Holdings Limited St William Homes LLP† St William Nine Limited St William Nineteen Limited St William One Ltd Corporate Governance Financial StatementsStrategic Report 209Berkeley Group 2023 Annual Report 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 Ltd St William Twelve Limited St William Twenty Limited St William Twenty-Eight Limited 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 Ltd Tabard Square (Building A) Limited Tabard Square (Building B) Limited Tabard Square (Car Park) Limited TBG (3) 2009 Limited 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 (viii) Registered office is 19 Portsmouth Road, Cobham, Surrey, KT11 1JG † 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 continue 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) Jersey 28 Esplanade, St. Helier, JE2 3QA, Jersey Berkeley (Carnwath Road) Limited Isle of Man First Floor, Jubilee Buildings, Victoria Street, Douglas, IM1 2SH, Isle of Man Berkeley (Hong Kong) Limited Hong Kong 3806 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Berkeley Homes Special Contracts Public Limited (iii) Scotland Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN Berkeley Investments (IOM) Limited (in liquidation) Isle of Man First Floor, Jubilee Buildings, Victoria Street, Douglas, IM1 2SH, Isle of Man Berkeley Property Investments Limited Jersey 28 Esplanade, St. Helier, JE2 3QA, Jersey Berkeley Real Estate Consulting (Beijing) Co. Limited* China Unit 1902, floor 19, No.1, Guanghua Road, ChaoYang District, Beijing, China Berkeley Residential (Singapore) Limited Singapore 77 Robinson Road, #13-00 Robinson 77, Singapore 068896 Berkeley Whitehart Investments Limited Jersey 28 Esplanade, St. Helier, JE2 3QA, Jersey Comiston Properties Limited Bahamas Ocean Centre, Montagu Foreshore, East Bay Street, Nassau, New Providence, The Bahamas Real Star Investments Limited (i)(ii) Jersey 28 Esplanade, St. Helier, JE2 3QA, Jersey Silverdale One Limited (ii) Jersey 28 Esplanade, St. Helier, JE2 3QA, Jersey St George Battersea Reach Limited Jersey 2 Hill Street, St. Helier, JE2 4UA, Jersey (i) Agency company of St James Group Limited (ii) Non-UK nominee company (iii) Ordinary, A deferred and B deferred shares * Accounting date of 31 December ## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 2.26 Subsidiaries and joint ventures continued (b) Joint ventures At 30 April 2023, 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, unless otherwise stated, 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. | | | (ii) | | (ii) | | --- | --- | --- | --- | --- | | Berkeley Carlton Holdings Limited | | | St George Little Britain (No. 1) Limited | | | | (ii) | | | (ii) | | Berkeley Sutton Limited | | | St George Little Britain (No.2) Limited | | (i) Diniwe One Limited St Katharine Homes LLP Diniwe Two Limited STKM Limited (ii) (v) Mayfield Market Towns Limited *** Strand Property Unit Trust (unregistered) (ii) (v) Mayflower Residential Limited *** The St Edward Homes Partnership (i) (unregistered partnership) Segro V-Park Grand Union LLP*† The St Edward (Strand) Partnership SEH Manager Limited (i) (unregistered partnership) SEH Nominee Limited (iv) (v) (ii) U B Developments Limited SES Manager Limited SES Nominee Limited (i) Partnership with no share capital (iii) (ii) A ordinary and B ordinary shares St Edward Homes Limited St Edward Homes Number Five Limited** (iii) A ordinary, B ordinary, C preference and D preference shares St Edward Homes Number Four Limited** (iv) B ordinary shares (v) Registered office is 19 Portsmouth Road, Cobham, Surrey, KT11 1JG St Edward Homes Number One Limited** (v) * Accounting date of 31 December St Edward Homes Number Three Limited** ** 100% owned by St Edward Homes Limited St Edward Homes Number Two Limited** *** Accounting date of 31 March St Edward Homes Partnership Freeholds Limited † Registered office address is 1 New Burlington Place, London, St Edward Strand Partnership Freeholds Limited United Kingdom, W1S 2HR 210 Berkeley Group 2023 Annual Report # COMPANY BALANCE SHEET | As at 30 April | Notes | 2023 £m | 2022 £m | | --- | --- | --- | --- | | **Fixed assets** | | | | | Investments | C2.4 | 1,438.1 | 1,435.7 | | | | 1,438.1 | 1,435.7 | | **Current assets** | | | | | Debtors | C2.5 | 542.6 | 543.4 | | Cash at bank and in hand | | 0.9 | 0.9 | | | | 543.5 | 544.3 | | **Current liabilities** | | | | | Creditors (amounts falling due within one year) | C2.6 | (841.6) | (860.6) | | **Net current liabilities** | | (298.1) | (316.3) | | **Total assets less current liabilities and net assets** | | 1,140.0 | 1,119.4 | | **Capital and reserves** | | | | | Called-up share capital | C2.7 | 6.3 | 6.5 | | Share premium account | C2.7 | 49.8 | 49.8 | | Capital redemption reserve | | 25.2 | 25.0 | | Profit and loss account | | 1,058.7 | 1,038.1 | | **Total shareholders' funds** | | 1,140.0 | 1,119.4 | 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 £278.8 million (2022: £422.9 million). The financial statements on pages 211 to 216 were approved by the Board of Directors on 21 June 2023 and were signed on its behalf by: R J Stearn Chief Financial Officer Registered no: 5172586 Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 211 # COMPANY STATEMENT OF CHANGES IN EQUITY | | Called-up share capital £m | Share premium account £m | Capital redemption reserve £m | Profit and loss account £m | Total shareholders' funds £m | | --- | --- | --- | --- | --- | --- | | At 1 May 2022 | 6.5 | 49.8 | 25.0 | 1,038.1 | 1,119.4 | | Profit after taxation for the year | - | - | - | 278.8 | 278.8 | | Purchase of ordinary shares | (0.2) | - | 0.2 | (155.4) | (155.4) | | Charge in respect of employee share schemes | - | - | - | (1.6) | (1.6) | | Deferred tax in respect of employee share schemes | - | - | - | (2.7) | (2.7) | | Dividends to equity holders of the Company | - | - | - | (98.5) | (98.5) | | At 30 April 2023 | 6.3 | 49.8 | 25.2 | 1,058.7 | 1,140.0 | | At 1 May 2021 | 6.6 | 49.8 | 24.9 | 1,131.2 | 1,212.5 | | Profit after taxation for the year | - | - | - | 422.9 | 422.9 | | Purchase of ordinary shares | (0.1) | - | 0.1 | (63.7) | (63.7) | | Charge in respect of employee share schemes | - | - | - | (2.7) | (2.7) | | Deferred tax in respect of employee share schemes | - | - | - | 1.9 | 1.9 | | Capital Return to equity holders of the Company | - | - | - | (451.5) | (451.5) | | At 30 April 2022 | 6.5 | 49.8 | 25.0 | 1,038.1 | 1,119.4 | 212 Berkeley Group 2023 Annual Report # NOTES TO THE COMPANY FINANCIAL STATEMENTS ## C1 Basis of preparation ### C1.1 Introduction The Company meets the definition of a qualifying entity under Financial Reporting Standard 101 (FRS 101) issued by the Financial Reporting Council. Accordingly, these financial statements were prepared in accordance with FRS 101 'Reduced Disclosure Framework' as issued by the Financial Reporting Council. In preparing these financial statements, the Company applies the recognition measurement and disclosure requirements of UK-adopted international accounting standards, but makes amendments where necessary in order to comply with the Companies Act 2006. 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 178 to 210. 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 annual return of £0.3 billion to shareholders set out to 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 at least 12 months from the date of signing the accounts, notwithstanding its net current liability position of £298.1 million (2022: £316.3 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 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 before taxation is stated after charging the following amounts: | | 2023 £m | 2022 £m | | --- | --- | --- | | Auditor's remuneration | 0.1 | 0.1 | There were no non-audit services provided by the Company's current auditor during the year (2022: £nil). ### C2.2 Directors and employees The Company operates three equity settled, share based compensation plans (2022: one). 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. Berkeley Group 2023 Annual Report 213 Strategic Report Corporate Governance Financial Statements NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED # **C2.2 Directors and employees continued** 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. | | 2023 £m | 2022 £m | | --- | --- | --- | | **Staff costs:** | | | | Wages and salaries | 2.4 | 2.2 | | Social security costs | 0.3 | 1.3 | | Share based payments - equity settled | 0.6 | 0.2 | | | **3.3** | **3.7** | The average monthly number of persons employed by the Company during the year was 12, all of whom are Directors (2022: 12). # **Directors** Details of Directors' emoluments are set out in the Remuneration Report on pages 132 to 156. # **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 to the Consolidated Financial Statements. Contributions amounting to £nil (2022: £nil) were paid into the defined contribution scheme during the year. # **Share based payments** The charge to the profit and loss account in respect of equity settled share based payments in the year, relating to grants of shares, share options and notional shares awarded under the 2011 LTIP was £0.2 million (2022: £0.2 million). The charge to the profit and loss account in respect of equity settled share based payments in the year under the new Long-Term Option Plan "LTOP" and Restricted Share Plan "RSP" was £0.3 million and £0.1 million respectively (2022: £nil). The charge to the reserves during the year in respect of employee share schemes was £1.6 million (2022: £2.7 million) which includes the corresponding entry to the cost of investment of £2.4 million (2022: £1.8 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 132 to 156 as well as note 2.5 to the Consolidated Financial Statements. In the year 1,350,000 (2022: nil) LTOP and 38,599 (2022: nil) RSP awards were granted and were outstanding at 30 April 2023. # **C2.3 The Berkeley Group Holdings plc profit and loss account** The profit for the year in the Company is £278.8 million (2022: £422.9 million). # **C2.4 Investments** Investments in subsidiary undertakings are included in the Balance Sheet at cost less provision for any impairment. | | 2023 £m | 2022 £m | | --- | --- | --- | | **Investments at cost:** | | | | Investments in shares of subsidiary undertaking at 1 May | 1,435.7 | 1,433.9 | | Additions | 2.4 | 1.8 | | Investments in shares of subsidiary undertaking at 30 April | **1,438.1** | **1,435.7** | Additions in the year relate to Company contributions to The Berkeley Group plc for employee services to be settled through the issue of shares on the vesting of the Berkeley Group Holdings plc 2011 LTIP awards, LTOP and RSP 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 to the Consolidated Financial Statements. 214 Berkeley Group 2023 Annual Report ## 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. | | 2023 £m | 2022 £m | | --- | --- | --- | | **Current** | | | | Amounts owed from subsidiary undertakings | 536.6 | 532.7 | | Deferred tax | 6.0 | 10.7 | | | **542.6** | **543.4** | 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: | | 2023 £m | 2022 £m | | --- | --- | --- | | At 1 May | 10.7 | 12.6 | | Deferred tax in respect of employee share schemes | (4.7) | 11 | | Realisation of deferred tax asset on vesting of employee share scheme | - | (3.0) | | At 30 April | **6.0** | **10.7** | 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 and 25% as appropriate (2022: 19% and 25% as appropriate). Accordingly, all temporary differences have been calculated. There is no unprovided deferred tax (2022: £nil) at the Balance Sheet date. The deferred tax asset of £6.0 million relates to short-term timing differences (2022: £10.7 million). ## C2.6 Creditors: Amounts falling due within one year Creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method. | | 2023 £m | 2022 £m | | --- | --- | --- | | **Current** | | | | Amounts owed to subsidiary undertakings | (837.9) | (855.4) | | Other taxation and social security | (3.7) | (5.1) | | Accruals and deferred income | - | (0.1) | | | **(841.6)** | **(860.6)** | All amounts included above are unsecured. The interest rate on £837.9 million (2022: £855.4 million) of the balance owed to subsidiary undertakings is 4.0% (2022: 4.0%), with no fixed repayment date. Strategic Report Corporate Governance Financial Statements Berkeley Group 2023 Annual Report 215 # NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED ## C2.7 Called-up share capital The movements on allotted and fully paid share capital for the Company in the year were as follows: | | Ordinary shares | | Share capital | | Share premium | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 No '000 | 2022 No '000 | 2023 £m | 2022 £m | 2023 £m | 2022 £m | | Issued | | | | | | | | At start of year | 120,590 | 132,237 | 6.5 | 6.6 | 49.8 | 49.8 | | Shares cancelled | (4,053) | (1,531) | (0.2) | (0.1) | - | - | | Share consolidation | - | (10,116) | - | - | - | - | | At end of year | 116,537 | 120,590 | 6.3 | 6.5 | 49.8 | 49.8 | During the 2023 financial year, 4.0 million shares were repurchased (2022: 1.5 million) for a total consideration of £155.4 million, excluding transaction costs (2022: £63.7 million). These shares were subsequently cancelled (2022: 1.5 million). Each ordinary share of 5.4141 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 28 September 2022, 0.3 million ordinary shares (2022: 0.5 million) were allotted and issued to the Employee Benefit Trust. On 30 September 2022, 0.3 million ordinary shares (2022: 0.5 million) were transferred from the Employee Benefit Trust to Executive Directors to satisfy the exercise of options under the 2011 LTIP. At 30 April 2023, there were 0.1 million shares held in trust (2022: 0.1 million) by the Employee Benefit Trust. The market value of these shares at 30 April 2023 was £4.6 million (2022: £3.0 million). At 30 April 2023, there were 8.9 million (2022: 9.2 million) treasury shares held by the Group. The market value of the shares at 30 April 2023 was £398.4 million (2022: £376.8 million). In the prior year in order to complete the Surplus Capital Return, 136.6 million B-Shares were issued at a nominal value of 0.1 pence per share. These were subsequently repurchased and cancelled. Following the Surplus Capital Return, a share consolidation was undertaken which reduced the Company's ordinary share capital, net of treasury and Employee Benefit Trust shares, by 7.65%. The share consolidation replaced the total number of existing ordinary shares of 132.3 million, with a nominal value of 5 pence each, into a reduced number of new ordinary shares of 122.1 million, each at a nominal value of 5.4141 pence at the time of the consolidation. The movements in the year are disclosed in notes 2.18 and 2.19 to the Consolidated Financial Statements. ## C2.8 Dividends per share Dividend distributions to shareholders are recognised as a liability in the period in which the dividends are appropriately authorised and approved for 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. | | 2023 | | 2022 | | | --- | --- | --- | --- | --- | | | Dividend per share pence | £m | Dividend per share pence* | £m | | Amounts recognised as distributions to equity shareholders during the year: | | | | | | September 2021 - Surplus Capital Return | - | - | 371.00 | 451.5 | | September 2022 | 21.25 | 23.3 | - | - | | March 2023 | 69.44 | 75.2 | - | - | | Total dividends | | 98.5 | | 451.5 | * Surplus Capital Return paid to shareholders via B-Share Scheme ## 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. 216 Berkeley Group 2023 Annual Report ## FIVE YEAR SUMMARY 2023 2022 2021 2020 2019 £m £m £m £m £m Income statement Revenue from operations 2,550.2 2,348.0 2,202.2 1,920.4 2,957.4 Operating profit 518.3 507.9 502.3 469.7 768.4 Share of results of joint ventures 96.3 56.1 22.4 33.3 8.8 Net finance (costs)/income (10.6) (12.5) (6.6) 0.7 (2.0) Profit before taxation 604.0 551.5 518.1 503.7 775.2 Basic earnings per share 426.8p 417.8p 339.4p 324.9p 481.1p Statement of financial position Corporate Governance Capital employed 2,921.9 2,867.2 2,047.2 1,962.7 1,988.3 Net cash 410.4 268.9 1,128.2 1,138.9 975.0 Net assets 3,332.3 3,136.1 3,175.4 3,101.6 2,963.3 (1) Net assets per share attributable to shareholders 3,100.5p 2,818p 2,612p 2,472p 2,305p Ratios and statistics (2) Return on capital employed 21.2% 23.0% 26.2% 25.5% 39.9% (3) Return on equity after tax 14.4% 15.3% 13.5% 13.5% 22.6% (4) Return on equity before tax 18.7% 17.5% 16.5% 16.6% 27.9% (5) | Units sold | | 4,043 3,760 2,825 2,723 3,698 | | | --- | --- | --- | --- | | | (6) | | Financial StatementsStrategic Report | | Cash due on forward sales | | £2,136 £2,171 £1,712 £1,858 £1,831 | | (7) Gross margin on land holdings £7,629 £8,258 £6,884 £6,417 £6,247 (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. 217Berkeley Group 2023 Annual Report ## FINANCIAL DIARY Annual General Meeting and Trading Update 8 September 2023 Half year end 31 October 2023 Interim Results Announcement for the six months ending 31 October 2023 8 December 2023 Trading Update March 2024 Year end 30 April 2024 Announcement of Results for the year ending 30 April 2024 June 2024 Publication of 2024 Annual Report August 2024 218 Berkeley Group 2023 Annual Report ## REGISTERED OFFICE AND ADVISORS Registered office and principal place Corporate brokers and Bankers of business financialadvisors Barclays Bank plc UBS Investment Bank HSBC UK Bank plc Barclays Bank plc Lloyds Bank plc Banco Santander, S.A. Share price information National Westminster Bank plc The Company’s share capital is listed Handelsbanken plc onthe London Stock Exchange. Registered number: 5172586 Thelatest share price is available Auditor viathe Company’s website at KPMG LLP Registrars www.berkeleygroup.co.uk Link Group 10th Floor Solicitor Central Square Herbert Smith Freehills LLP Corporate Governance 29 Wellington Street Leeds LS1 4DL 0871 664 0300 (from the UK) +44 (0) 371 664 0300 (from overseas) shareholderenquiries@linkgroup.co.uk Financial StatementsStrategic Report 219Berkeley Group 2023 Annual Report The Berkeley Group Holdings plc Berkeley House 19 Portsmouth Road Cobham Surrey KT11 1JG 220 Berkeley Group 2023 Annual Report 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® Consultancy, design and production Chainof custody and an ISO14001-certified www.luminous.co.uk environmental management system recycling over 99per cent of all dry waste. Design and production www.luminous.co.uk 220 Berkeley Group 2023 Annual Report The Berkeley Group Holdings plc Berkeley House 19 Portsmouth Road Cobham Surrey KT11 1JG www.berkeleygroup.co.uk Registered number: 5172586