Interim Results - Part 2

Berkeley Group Holdings (The) PLC 07 December 2007 Statement of Directors' Responsibilities This statement, which should be read in conjunction with the independent review of the auditors set out at the end of this condensed set of interim financial statements (the 'interim financial statements'), is made to enable shareholders to distinguish the respective responsibilities of the Directors and the auditors in relation to the interim financial statements which the Directors confirm has been presented on a going concern basis. The Directors consider that the Group has used appropriate accounting policies, consistently applied and supported by reasonable and appropriate judgements and estimates. A copy of the interim financial statements of the Group is placed on the website of The Berkeley Group Holdings: www.berkeleygroup.co.uk. The Directors are responsible for the maintenance and integrity of the information on the website. Information published on the internet is accessible in many countries with different legal requirements. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. The Directors confirm that this condensed set of interim financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8. The Directors of The Berkeley Group Holdings plc are listed in The Berkeley Group Holdings plc Annual Report for 30 April 2007, with the exception of the following changes in the period: Mr R S J H Lewis resigned as an Executive Director and Group Chairman on 31 July 2007. Mrs V M Mitchell, an existing Non-executive Director, was appointed Group Chairman on 1 August 2007. Mr J A Armitt was appointed as a Non-executive Director on 1 October 2007. A list of current Directors is maintained on The Berkeley Group Holdings website. By order of the Board A W Pidgley 7 December 2007 Managing Director R C Perrins 7 December 2007 Finance Director Consolidated Income Statement Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Notes Â£'000 Â£'000 Â£'000 =================================================================================== Continuing operations Revenue 4(a) 441,372 381,153 918,410 Cost of sales (299,968) (271,311) (649,549) ___________________________________________________________________________________ Gross profit 141,404 109,842 268,861 Net operating expenses (46,657) (39,438) (91,789) ___________________________________________________________________________________ Operating profit 4(b) 94,747 70,404 177,072 Finance income 5 4,155 5,797 10,121 Finance costs 5 (6,793) (794) (5,941) Share of post tax results of joint ventures using the equity method 4(c) (1,463) 6,052 6,798 ___________________________________________________________________________________ Profit before taxation 90,646 81,459 188,050 Taxation 6 (27,251) (21,560) (52,505) ___________________________________________________________________________________ Profit after taxation 63,395 59,899 135,545 =================================================================================== Earnings per Ordinary Share - Basic 7 52.6p 49.8p 112.6p - Diluted 7 52.5p 49.6p 112.3p =================================================================================== Consolidated Statement of Recognised Income and Expense Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 =================================================================================== Profit for the financial period 63,395 59,899 135,545 Actuarial (loss) / gain recognised in the pension scheme (259) (673) 961 Deferred tax on actuarial (loss) / gain recognised in the pension scheme 78 202 (288) Deferred tax in respect of employee share schemes 3,300 7,730 23,850 ___________________________________________________________________________________ Total recognised income for the period 66,514 67,158 160,068 =================================================================================== Consolidated Balance Sheet At At At 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Notes Â£'000 Â£'000 Â£'000 =================================================================================== Assets Non-current assets Intangible assets 18,551 - 19,686 Property, plant and equipment 4,356 2,123 2,368 Investments accounted for using equity method 1,779 61,546 1,729 Deferred tax assets 43,494 25,446 34,594 ___________________________________________________________________________________ 68,180 89,115 58,377 ___________________________________________________________________________________ Current assets Inventories 1,099,216 754,788 1,057,994 Trade and other receivables 50,529 26,280 27,601 Cash and cash equivalents 170,175 322,047 140,330 ___________________________________________________________________________________ 1,319,920 1,103,115 1,225,925 ___________________________________________________________________________________ Liabilities Current liabilities Borrowings (57,433) (85) (59,368) Trade and other payables (353,780) (231,496) (341,860) Current tax liabilities (39,881) (31,956) (38,680) ___________________________________________________________________________________ (451,094) (263,537) (439,908) ___________________________________________________________________________________ Net current assets 868,826 839,578 786,017 ___________________________________________________________________________________ Total assets less current liabilities 937,006 928,693 844,394 ___________________________________________________________________________________ Non-current liabilities Retirement benefit obligation - (1,773) - Other non-current liabilities (86,112) (19,767) (62,819) ___________________________________________________________________________________ (86,112) (21,540) (62,819) ___________________________________________________________________________________ Net assets 850,894 907,153 781,575 =================================================================================== Shareholders' equity Share capital 18,123 24,164 18,123 Share premium 264 264 264 Capital redemption reserve 12,132 6,091 12,132 Other reserve (961,299) (961,299) (961,299) Revaluation reserve 13,814 - 17,725 Retained profit 1,768,992 1,805,405 1,694,299 Joint ventures' reserves (1,132) 32,528 331 ___________________________________________________________________________________ Total equity 8 850,894 907,153 781,575 =================================================================================== Consolidated Cash Flow Statement Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Notes Â£'000 Â£'000 Â£'000 =================================================================================== Cash flows from operating activities Cash generated from operations 9 66,830 103,786 199,053 Dividends from joint ventures - 6,016 6,016 Interest received 4,155 5,797 10,121 Interest paid (3,691) (64) (2,716) Tax paid (31,572) (21,422) (51,540) ___________________________________________________________________________________ Net cash flow from operating activities 35,722 94,113 160,934 ___________________________________________________________________________________ Cash flows from investing activities Purchase of property, plant and equipment (2,557) (747) (1,183) Sale of property, plant and equipment 128 206 345 Purchase of shares in joint ventures (70) - (5) Sale of shares in joint ventures - 10 10 Movements in loans with joint ventures (1,443) 7,795 6,528 Acquisition of subsidiary undertaking - - (97,457) Cash balance in subsidiary acquired - - 34,658 Expenses relating to acquisition of subsidiary - - (1,812) ___________________________________________________________________________________ Net cash flow from investing activities (3,942) 7,264 (58,916) ___________________________________________________________________________________ Cash flows from financing activities Redemption of shares - - (241,641) (Decrease) / Increase in short-term borrowings (1,935) - 59,283 ___________________________________________________________________________________ Net cash flow from financing activities (1,935) - (182,358) ___________________________________________________________________________________ Net increase / (decrease) in cash and cash equivalents 29,845 101,377 (80,340) Cash and cash equivalents at the start of the period 140,330 220,670 220,670 ___________________________________________________________________________________ Cash and cash equivalents at the end of the period 170,175 322,047 140,330 =================================================================================== Notes to condensed consolidated half-yearly financial information 1 General information The Company is a limited liability company incorporated and domiciled in the United Kingdom. The address of its registered office is Berkeley House, 19 Portsmouth Road, Cobham, Surrey, KT11 1JG. This condensed consolidated half-yearly financial information was approved for issue on 7 December 2007. These interim financial results do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 April 2007 were approved by the Board of Directors on 19 July 2007 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 237 of the Companies Act 1985. 2 Basis of preparation This condensed consolidated half-yearly financial information for the six months ended 31 October 2007 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim financial reporting' as adopted by the European Union. This half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 30 April 2007, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. 3 Accounting policies The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 April 2007, as described in those annual financial statements. The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year ending 30 April 2008: â€¢ IFRS 7 'Financial Instruments: Disclosures' and the Amendments to IAS 1 'Presentation of Financial Statements: Capital Disclosures'; â€¢ IFRIC9 'Reassessment of Embedded Derivatives'; â€¢ IFRIC10 'Interim Financial Reporting and Impairment'. The adoption of these standards has no impact on the consolidated financial statements, with the exception of the adoption of IFRS 7 which will require the adoption of certain new disclosures in the consolidated financial statements for the year ending 30 April 2008. The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year ending 30 April 2008 and have not been early adopted: â€¢ IFRS 8 'Operating Segments'; â€¢ IFRIC11 'IFRS2- Group and Treasury Share Transactions'; â€¢ IFRIC12 'Service Concession Arrangements'; â€¢ IAS 23 (Amendment) 'Borrowing Costs'. These standards are not expected to have a significant impact on the consolidated financial statements. 4 Segmental reporting Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Continuing operations Â£'000 Â£'000 Â£'000 =================================================================================== (a) Revenue Residential housebuilding 422,084 375,223 867,944 Commercial property and other activities 19,288 5,930 50,466 ___________________________________________________________________________________ 441,372 381,153 918,410 ___________________________________________________________________________________ (b) Operating profit Residential housebuilding 89,763 69,191 170,097 Commercial property and other activities 4,984 1,213 6,975 ___________________________________________________________________________________ 94,747 70,404 177,072 ___________________________________________________________________________________ (c) Share of post tax results of joint ventures Residential housebuilding (1,463) 6,012 6,751 Commercial property and other activities - 40 47 ___________________________________________________________________________________ (1,463) 6,052 6,798 =================================================================================== All revenue and profit disclosed in the table above relate to continuing activities of the Group and are derived from activities performed in the United Kingdom. Included in Group residential housebuilding revenue and operating profit are Â£13,106,000 and Â£717,000 in respect of land sales (2006: Â£3,247,000 and Â£1,631,000). 5 Net finance costs Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Continuing operations Â£'000 Â£'000 Â£'000 =================================================================================== Finance income 4,155 5,797 10,121 ___________________________________________________________________________________ Finance costs Interest payable on bank loans and overdrafts (1,740) (291) (3,000) Bank facility refinancing costs (1,792) - - Other finance costs (3,261) (503) (2,941) ___________________________________________________________________________________ (6,793) (794) (5,941) ___________________________________________________________________________________ Net finance (costs) / income (2,638) 5,003 4,180 =================================================================================== 6 Taxation Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Continuing operations Â£'000 Â£'000 Â£'000 =================================================================================== Current tax UK corporation tax payable (33,451) (21,909) (63,107) Adjustments in respect of previous periods 678 1,120 4,611 ___________________________________________________________________________________ (32,773) (20,789) (58,496) Deferred tax 5,522 (771) 5,991 ___________________________________________________________________________________ (27,251) (21,560) (52,505) =================================================================================== 7 Earnings per Ordinary Share Earnings per Ordinary Share is based on the profit for the financial period of Â£63,395,000 (2006: Â£59,899,000) and the weighted average number of Ordinary Shares in issue during the period of 120,598,836 (2006: 120,246,800). For diluted earnings per Ordinary Share, the weighted average number of Ordinary Shares in issue is adjusted to assume the conversion of all dilutive potential Ordinary Shares. The dilutive potential Ordinary Shares relate to shares granted under employee share schemes where the exercise price is less than the average market price of the Ordinary Shares during the period. The effect of the dilutive potential Ordinary Shares is 141,371 shares (2006: 463,133), which gives a diluted weighted average number of Ordinary Shares of 120,740,207 (2006: 120,709,933). 8 Statement of Changes in Shareholders' Equity Capital Joint Share Share redemption Other Revaluation Retained ventures' capital premium reserve reserve reserve profit reserves Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Unaudited At 1 May 2007 18,123 264 12,132 (961,299) 17,725 1,694,299 331 781,575 Profit/(loss) for the financial period - - - - - 64,858 (1,463) 63,395 Reserves transfer from revaluation reserve - - - - (3,911) 3,911 - - Actuarial loss recognised in the pension scheme - - - - - (259) - (259) Deferred tax on actuarial loss recognised in the pension scheme - - - - - 78 - 78 Credit in respect of employee share schemes - - - - - 2,805 - 2,805 Deferred tax in respect of employee share schemes - - - - - 3,300 - 3,300 ___________________________________________________________________________________________________________________ At 31 October 2007 18,123 264 12,132 (961,299) 13,814 1,768,992 (1,132) 850,894 =================================================================================================================== Unaudited At 1 May 2006 24,164 264 6,091 (961,299) - 1,735,475 32,495 837,190 Profit for the financial period - - - - - 53,847 6,052 59,899 Dividends received from joint ventures - - - - - 6,019 (6,019) - Actuarial loss recognised in the pension scheme - - - - - (673) - (673) Deferred tax on actuarial loss recognised in the pension scheme - - - - - 202 - 202 Credit in respect of employee share schemes - - - - - 2,805 - 2,805 Deferred tax in respect of employee share schemes - - - - - 7,730 - 7,730 ___________________________________________________________________________________________________________________ At 31 October 2006 24,164 264 6,091 (961,299) - 1,805,405 32,528 907,153 =================================================================================================================== Audited At 1 May 2006 24,164 264 6,091 (961,299) - 1,735,475 32,495 837,190 Profit for the financial year - - - - - 128,747 6,798 135,545 Acquisition of subsidiary - - - - 20,297 32,946 (32,946) 20,297 Dividends received from joint ventures - - - - - 6,016 (6,016) - Reserves transfer from revaluation reserve - - - - (2,572) 2,572 - - Redemption of shares (6,041) - 6,041 - - (241,641) - (241,641) Actuarial gain recognised in the pension scheme - - - - - 961 - 961 Deferred tax on actuarial gain recognised in the pension scheme - - - - - (288) - (288) Credit in respect of employee share schemes - - - - - 5,661 - 5,661 Deferred tax in respect of employee share schemes - - - - - 23,850 - 23,850 ___________________________________________________________________________________________________________________ At 30 April 2007 18,123 264 12,132 (961,299) 17,725 1,694,299 331 781,575 =================================================================================================================== 9 Notes to the Consolidated Cash Flow Statement Six months Six months Year ended ended ended 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 =================================================================================== Net cash flows from operating activities Continuing operations Profit for the financial period 63,395 59,899 135,545 Adjustments for: - Taxation 27,251 21,560 52,505 - Depreciation 491 665 1,278 - Amortisation of intangible assets 1,135 - 746 - Loss/(profit) on sale of property, plant and equipment (50) 5 (34) - Finance income (4,155) (5,797) (10,121) - Finance costs 6,793 794 5,941 - Share of results of joint ventures after tax 1,463 (6,052) (6,798) - Non-cash charge in respect of share awards 2,805 2,805 5,661 Changes in working capital: - (Increase)/decrease in inventories (41,222) 9,085 18,385 - (Increase)/decrease in receivables (22,928) (2,588) 5,354 - Increase in payables 32,122 32,801 216 - Decrease in employee benefit obligations (270) (9,391) (9,625) ___________________________________________________________________________________ Cash generated from continuing operations 66,830 103,786 199,053 =================================================================================== Reconciliation of net cash flow to net cash Net increase/(decrease) in cash and cash equivalents 29,845 101,377 (80,340) Cash outflow/(inflow) from decrease/ (increase) in borrowings 1,935 - (59,283) ___________________________________________________________________________________ Movement in net cash in the period 31,780 101,377 (139,623) Opening net cash 80,962 220,585 220,585 ___________________________________________________________________________________ Closing net cash 112,742 321,962 80,962 =================================================================================== At At At 31 October 31 October 30 April 2007 2006 2007 Unaudited Unaudited Audited Â£'000 Â£'000 Â£'000 =================================================================================== Net cash Cash and cash equivalents 170,175 322,047 140,330 Borrowings (57,433) (85) (59,368) ___________________________________________________________________________________ Net cash 112,742 321,962 80,962 =================================================================================== 10 Contingent liabilities The Group has guaranteed bank facilities of Â£2,500,000 (2006: Â£2,500,000) in joint ventures. The Group has guaranteed road and performance agreements in the ordinary course of business of Â£86,369,000 (31 October 2006: Â£18,765,000; 30 April 2007: Â£45,563,000). 11 Related party transactions The Group has entered into the following related party transactions: a) Charges made for goods and services supplied to joint ventures During the financial period Â£6,000 (2006 Â£1,965,000) was charged to joint ventures for goods and services supplied. b) Transactions with Directors During the financial period, each of Mr A W Pidgley and Mr R C Perrins paid Â£306,000 and Â£34,000 respectively to Berkeley Homes plc for works carried out at their homes under the Group's own build scheme. There were no balances outstanding at the half year end. c) Investment with Saad Investments Company Limited In May 2007 the establishment of three joint venture companies, Saad Berkeley Regeneration Limited, Saad Berkeley Developments Limited and Saad Berkeley Investments Limited was completed. The joint venture partner is Saad Investments Company Limited ('Saad') and, as Saad is currently a 29.4% shareholder in The Berkeley Group Holdings plc, is considered a related party. During the six month period, the Group invested Â£1,131,000 in the three private joint venture companies through a combination of share capital and shareholder loans. Independent review report to The Berkeley Group Holdings plc Introduction We been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007, which comprises the Consolidated Income Statement, the Consolidated Statement of Recognised Income and Expense, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants London 7 December 2007 This information is provided by RNS The company news service from the London Stock Exchange

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