The Berkeley Group (BKG) Trading update summary

Strategic priorities and market context

• Focus remains on brownfield regeneration in urban areas, aligned with government housing policy and economic growth objectives.

• Recent increases in costs, regulation, and geopolitical volatility have created a challenging operating environment, impacting timelines and confidence.

• The 'Homes for London' package is seen as a positive step, but effective local implementation is needed to stimulate homebuilding.

• Building Safety Regulator's new gateway process has extended project timelines by about twelve months.

• Actions taken include maintaining strong cash balances, reducing land creditors, and cutting operating costs by 25% in real terms.

Strategic actions and value creation levers

• No new land acquisitions planned except via joint ventures, due to overheated land prices and regulatory burdens.

• Focus on optimizing existing land holdings of over 50,000 homes, targeting £2 billion added value by 2035.

• Construction phasing will be tightly matched to market demand and regulatory approvals.

• Continued investment in Berkeley Living (BTR), with 4,000 BTR homes targeted by FY35 and £400m invested in the first six buildings.

• Ongoing review of BTR project phasing and capital recycling as market conditions evolve.

Financial targets and shareholder returns

• Operating margin targeted within the historic range of 17.5% to 19.5%, with further cost reductions planned.

• £336 million of £2 billion shareholder returns already delivered; next target is £564 million by September 2030, with share buybacks prioritized.

• Over £1.4 billion pre-tax profit expected from FY27 to FY30, with profit profile slightly weighted to 2027.

• Return on capital employed targeted at 15% as soon as possible, with 11–15% in the interim.

• Net cash position to be maintained, with flexibility to accelerate investment or shareholder returns as conditions improve.