Annual Report and Accounts an

RNS Number : 7912Q

Berkeley Group Holdings (The) PLC

10 August 2010

 



The Berkeley Group Holdings plc

Annual Report and Accounts and Notice of Annual General Meeting

Documents available for inspection

The Berkeley Group Holdings plc ("Berkeley" or the "Company") announces that the Annual Report and Accounts for the year ended 30 April 2010, Sustainability Report 2010, Notice of the 2010 Annual General Meeting and Shareholder Proxy Form were posted to shareholders on 9 August 2010.

Copies of these documents and proposed new Articles of Association have been submitted to the UK Listing Authority and are available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London

E14 5HS

The Annual Report and Accounts, Sustainability Report and Notice of AGM are also available on the Company's website at www.berkeleygroup.co.uk.

The Company's Annual General Meeting will be held on 8 September 2010 at 11.00 a.m, at The Woodlands Park Hotel, Woodlands Lane, Stoke D'Abernon, Cobham, Surrey KT11 3QB.  A summary of the material differences between the current articles of association and the proposed new articles of association is set out in the Notice of the 2010 Annual General Meeting. The proposed new Articles of Association will be available for inspection during normal business hours at the Company's registered office and the offices of the Company's solicitors, Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA from 9 August 2010 until the date of the Annual General Meeting.

A condensed set of Berkeley's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Company's preliminary results announcement released on 25 June 2010. That information, together with the information set out below, which is extracted from the 2010 Annual Report and Accounts, constitute the material required by Disclosure and Transparency Rule 6.3.5 which is required to be communicated to the media in unedited full text through a Regulatory Information Service. This announcement is not a substitute for reading the full 2010 Annual Report and Accounts. Page numbers and cross-references in the extracted information below refer to page numbers and sections in the 2010 Annual Report and Accounts.

PRINCIPAL RISKS AND UNCERTAINTIES (pages 26 and 27)

The principal risks facing the Group, which have been considered by the Board, are set out below as laid out on pages 26 and 27 of the 2010 Annual Report and Accounts.

Financial Risk

The Group finances its operations by a combination of shareholders' funds, minority interest, deposits and on account receipts and, where taken out, borrowings.

As the Group's operations 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 credit risk - the risk that a counterparty will default on their contractual obligations resulting in a loss to the Group. The Group's exposure to credit risk encompasses the current assets set out in note 23 to the consolidated financial statements which comprise cash and cash equivalents and trade receivables

·    Market interest rate risk - the risk that Group financing activities are adversely affected by fluctuation in market interest rates

The Board approves treasury policy and senior management control day-to-day operations. Relationships with banks and cash management are co-ordinated centrally. The objectives of the treasury policy are to maintain an appropriate capital structure and in doing so manage the financial risks identified above. The procedures for mitigation of the financial risks are set out in note 23 of the consolidated financial statements.

Operating Risk

All businesses are exposed to risk. Indeed, alongside risk comes opportunity and it is how such risks are managed that determines the success of the Group's strategy and, ultimately, its performance and results. Berkeley's strategy allows management to focus on creating sustainable long-term value for its shareholders, whilst taking advantage of opportunities as they arise in the short and medium-term.

Risk management is embedded in the organisation at operating company, divisional and Group levels, with different types of risk requiring different levels and types of management response.

The principal operating risks of the Group include, but are not limited to the risks as set out on page 27.

The Internal Control section within the Corporate Governance report on pages 55 to 59 sets out the Group's overall framework for internal control, setting the context for the identification, control and monitoring of these and other risks faced by the Group.

Risk	Mitigation
Macro Economic Climate Employment levels and the overall "feel-good factor" within the UK economy have a direct impact on the demand for housing.	Continuous assessment undertaken of economic conditions and the marketplace to ensure that the business is structured accordingly. Business strategy regularly reviewed to ensure that it matches the prevailing market conditions.
Sustainability Urban regeneration has a significant impact on the built environment and the communities in which it occurs. Sustainability issues are an integral component of the risks listed here, as failure to address sustainability issues can affect our ability to acquire land, gain planning permission, manage sites effectively and respond to increasing customer demand for sustainable homes. For more details of how these risks are managed, please see our Sustainability Report.	Board level Sustainability/Health & Safety Committee has the responsibility of setting the direction of the Group's strategy and ensuring it is aligned with business objectives. This committee meets twice a year with external consultants also attending.
Health & Safety Site accidents or site-related catastrophes, including fire and flood can result in serious injury or loss of life. The inability to attract the best staff, business interruption and reputational damage are all additional potential consequences.	Board level Sustainability/Health & Safety Committee has the responsibility of setting the direction of the Group's strategy. Dedicated Health & Safety teams in place at each division and at Group, with procedures, training and reporting all regularly reviewed to ensure high standards are maintained. Comprehensive accident investigation procedures in place.
Product Quality Berkeley has a reputation for the quality of its product.  If this is not maintained, it would expose the Group to reputational damage, as well as the additional cost of remediation.	A detailed review of the product is undertaken throughout the build process by experienced personnel. Local director sign off of units undertaken before serving notice of legal completion.
Land availability Inability to source suitable land to maintain land bank at appropriate margins in a highly competitive market.	Each land acquisition subject to formal appraisal and approval process. Schedule of all land holdings submitted monthly as part of key management information.
Planning Delays or refusals in obtaining commercially viable planning permissions on the Group's land holdings that meet its investment return criteria.	Full detailed planning assessment and risk assessment in place for each site without planning permission in place. Planning status of all sites reviewed at monthly divisional board meetings and bi-monthly Main Board meetings.
Sales Price / Volume Matching supply to demand in terms of product, location and price are key success factors for Berkeley's business. Incorrect assessments can result in missed sales targets and/or inefficient levels of completed stock.	Detailed market assessment undertaken of each site before acquisition, as well as ongoing reviews throughout the duration of the site to ensure supply is matched to demand. Overall mix of product throughout the Group reviewed on a regular basis, as well as stock levels. Forward sales are used to take the risk out of the development cycle where possible.
Mortgages The ability for customers to secure sufficient mortgage finance remains constrained by banks' lending criteria and mortgage valuations not reflecting market value. This continues to be a restriction on transaction levels and forward sales.	Manage financial risk through matching production closely to demand and retain prudent approach to cash and gearing. Work with customers through the completion process.
Build Cost / Programme In what is a competitive marketplace, build costs are affected by the availability of skilled labour and the price and availability of materials. These factors and the relationship with, and performance of, the contractors used by the Group impact on both build cost and programme.	Procurement strategy for each development agreed by divisional board before site acquisition. Build cost reconciliations and build programme dates are presented and reviewed in detail each month.
People The Group's success is highly dependent upon its ability to attract and retain the best people working in the industry. Failure to consider the succession of key management could result in lost experience and knowledge from the business.	Remuneration packages constantly reviewed to ensure they are competitive. Succession planning regularly reviewed at divisional and Main Board level. Close relationships and dialogue with key personnel.
Government Policy Changes to Government policy on housing (at both national and local level), including planning, affordable housing requirements and planning gain obligations all impact on the Group's business.	Effects of changes to planning policies at all levels closely monitored, and representations made where necessary.

RELATED PARTY TRANSACTIONS (page 84)

Note 24 to the consolidated financial statements on page 84 of the Annual Report and Accounts details the following related party transactions.

24.       Related party transactions

The Group has entered into the following related party transactions:

Transactions with Directors

During the financial year, Mr A W Pidgley paid £1,324,595 to Berkeley Homes plc for works carried out at his home under the Group's own build scheme (2009: £108,437). This is a scheme whereby eligible employees may enter into an arrangement, at commercial rates, with the Group for the construction or renovation of their own home. There were no balances outstanding at the year end.

Transactions with joint ventures

During the year there were no transactions with joint ventures. Last financial year inventory was sold to St Edward Homes Limited for £17,411,000, being the share of the transaction attributable to the other venturer in the joint venture. At 30 April 2010 an amount of £31,331,000 was outstanding and included within trade receivables (2009: £34,822,000).

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS (page 59)

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, and have elected to prepare the parent company financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and applicable law.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.

In preparing those financial statements, the Directors are required to:

·    select suitable accounting policies and then apply them consistently;

·    make judgements and estimates that are reasonable and prudent;

·    state whether IFRS as adopted by the European Union and applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Group and parent company financial statements respectively; and

·    prepare financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement

Each of the Directors, whose names and functions are listed in the Directors' Report confirm that, to the best of each person's knowledge:

a.         the Group financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

b.         the management report, which is incorporated into the Directors' report, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

R J Stearn

Company Secretary

For further information please contact:

Cardew Group                 Tel: [phone]

Tim Robertson

Catherine Maitland

 

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