Berkeley Group 2020 Annual Report Building homes Strengthening communities Improving lives 2020 Annual Report Tony Pidgley CBE, 1947–2020 Since the issue of Berkeley’s results for the year ended 30 April 2020 we have with the greatest sadness announced the death of our founder and Chairman Tony Pidgley CBE. Tony’s values, vision and philosophy are deeply embedded within Berkeley and all it does and stands for. The 2020 Annual Report reflects Tony’s lifelong passion for creating quality homes, strengthening local communities and improving people’s lives. Berkeley at a Glance Berkeley builds homes and communities across London, Birmingham and the South-East of England. We focus on large-scale regeneration developments where our unique expertise and strong capital base can unlock long-term social and economic value for our stakeholders. We are a purpose driven company, with a clear long-term vision and deeply embedded culture and values that shape everything we do, underpinning our success, our brand and the positive contributions we make to society, the economy and the natural world. Our Purpose is to build quality homes, Our Values strengthen communities and improve Have Integrity – build trust by being people's lives. open, clear and credible Our Vision is to be a world-class Be Passionate – take pride in what business, defined by the quality of the we do and the impact we make places we create, generating long-term value and having a positive impact Think Creatively – find individual on society. solutions for every site and situation Respect People – work together, empower people and value their contribution Excellence Through Detail – deliver the best through attention to detail in everything we do Kidbrooke Village Highlights Contents Delivering for all stakeholders Financial Highlights* Strategic Report Report Strategic 1 Highlights 4 Berkeley’s Strategy Profit before tax Net asset value per share 6 Long-Term Regeneration 14 Chairman’s Statement 16 Carbon and Climate Change £503.7m £24.72 18 Nature and Biodiversity (2019: £775.2m) (2019: £23.05) 20 Building Strong Communities 22 Chief Executive’s Statement 28 Market Overview 30 Business Strategy: Our Vision Pre-tax return on equity Cash due on forward sales 46 Environmental, Social and Governance Performance 48 Berkeley Foundation Corporate Governance 16.6% £1,858m 50 Business Model (2019: 27.9%) (2019: £1,831m) 52 Key Performance Indicators 54 Stakeholder Engagement 60 Section 172 (1) Statement Net cash Future gross margin in land holdings 62 Sustainability Accounting Standards Board Disclosures 64 Task Force on Climate Related Disclosures £1,138.9m £6,417m 65 Non-Financial Reporting (2019: £975.0m) (2019: £6,247m) Statement 66 How We Manage Risk 80 Trading and Financial Review Corporate Governance Statements Financial 86 Chairman’s Introduction to the Corporate Governance Report 88 Board of Directors 92 Board Leadership and Company Purpose 96 Division of Responsibilities Operational Highlights 99 Nomination Committee Report 102 Audit Committee Report 106 Directors’ Remuneration Report 2,723 £270m 135 Directors’ Report homes delivered of subsidies Financial Statements 144 Independent Auditors’ Report (plus 435 in joint ventures) 151 Consolidated Income Statement includes some 10% of London’s new provided to deliver affordable housing 151 Consolidated Statement private and affordable homes and and committed to wider community of Comprehensive Income supporting some 32,000 jobs and infrastructure benefits in the year 152 Consolidated Statement of Financial Position 153 Consolidated Statement of Changes in Equity 154 Consolidated Cash Flow 35 78.8 Statement sites Net Promoter Score 155 Notes to the Consolidated Financial Statements have net biodiversity gain strategies, maintained industry-leading 189 Company Balance Sheet 190 Company Statement which will create approximately Net Promoter Score (NPS) and of Changes in Equity 450 acres of new or measurably customer service ratings 191 Notes to the Company improved natural habitats on these Financial Statements developments alone 196 Five Year Summary 197 Financial Diary and Registered Office and Advisors A- Carbon positive sector-leading score for transparency business operations delivered and action on climate change from CDP for a third consecutive year * Reconciliations and explanations of our financial highlights are provided in our Key Performance Indicators section on page 52. Berkeley Group 2020 Annual Report 1 Before 2 Berkeley Group 2020 Annual Report Celebrating 20 years of Barnes Waterside Two decades ago our ground- breaking partnership with the Wildfowl and Wetlands Trust, Thames Water and Richmond Report Strategic Council transformed four disused concrete reservoirs into a community of 230 homes and the London Wetlands Centre, a world renowned nature reserve and education centre. “This project demonstrates how quickly wildlife can bounce back Corporate Governance when given the chance and the value of green and blue spaces to the health and wellbeing of local people.” Kevin Peberdy Chief Operating Officer, Wildfowl & Wetlands Trust Financial Statements Financial Strategic Report 4 Berkeley’s Strategy 6 Long-Term Regeneration 14 Chairman’s Statement 16 Carbon and Climate Change 18 Nature and Biodiversity 20 Building Strong Communities 22 Chief Executive’s Statement 28 Market Overview 30 Business Strategy: Our Vision 46 Environmental, Social and Governance Performance 48 Berkeley Foundation 50 Business Model 52 Key Performance Indicators 54 Stakeholder Engagement 60 Section 172 (1) Statement 62 Sustainability Accounting Standards Board Disclosures 64 Task Force on Climate Related Disclosures 65 Non-Financial Reporting Statement 66 How We Manage Risk 80 Trading and Financial Review Berkeley Group 2020 Annual Report 3 Berkeley’s Strategy Long-Term Strategy Our Brands Berkeley’s long-term strategy is to invest in opportunities 100% owned with the right risk-adjusted returns, while ensuring its financial strength reflects the prevailing macro environment, and to make returns to the shareholders who support us Berkeley is the original to achieve our purpose. brand, founded in 1976 in Surrey. Strategic Focus Berkeley has a unique operating model that is responsive 31 to the cyclical nature of the housing market and focuses on St George was originally 7 WEST MIDLANDS E formed as a joint venture IR CAMBRIDGESHIRE SH transforming the most challenging and complex sites into W N with the Speyhawk Group O TO RC P E M exceptional places where communities thrive. in 1985 and became wholly ST A ER WARWICKSHIRE H S T H R owned in 1991. I O E 35 R N R E 14 I H S Strategic Focus on long- Focus on London, D R O B F U E appreciation that term, complex and Birmingham and D R C I E H K B S I N D the market is capital intensive the South-East R G O St James was originally H F ESSEX GLOUCESTERSHIRE A RT inherently cyclical regeneration M E formed as a joint venture OXFORDSHIRE S H 9 H IR 8 E 33 with Thames Water in 1996 13 11 12 Operational risk Market-leading in Long-term and became wholly owned 17 2 10 in 2007. LONDON offset through sustainability and commitment to 11 32 22 15 21 financial strength climate change community building 37 1 1 BERKSHIRE 6 19 10 36 at all times and enhancing 28 2 15 25 WILTSHIRE 16 27 9 nature and 14 24 7 St Joseph was formed SOMERSET 6 4 12 KENT SURREY 8 biodiversity 30 26 in 2016 to focus on the HAMPSHIRE 13 5 Birmingham and West 23 3 20 Recognised brands Unparalleled Unrelenting Midlands markets. 18 34 5 and autonomous, commitment commitment to WEST SUSSEX EAST SUSSEX 16 experienced teams to customer the quality of our 3 Joint Ventures 29 4 satisfaction homes and places Business model People at the very heart of placemaking Read more on pages 50 to 51 Read more on page 15 St Edward is a joint venture, formed in 2006 and co-owned Land Holdings by Berkeley and M&G. Berkeley invests in land at the right point in the cycle and the depth and quality of the land holdings ensures that we do not need to acquire land unless there is a clear opportunity to add value. St William is a joint venture, formed in 2014 and co-owned by Our current portfolio consists of 58,413 plots across 98 sites. Berkeley and National Grid. Since 2011, Berkeley has increasingly focused on large-scale brownfield regeneration sites where our holistic approach to placemaking and community building can deliver lasting positive change. In total, Berkeley is now bringing forward over 25 of the largest and most complex brownfield regenerations, a number of which are now in, or coming into, production. Land Holdings as at 30 April 2020 Total Group 100% Owned Joint Ventures Sites 98 74 24 Plots – owned 50,558 39,765 10,793 Plots – contracted 7,855 2,393 5,462 Plots – total 58,413 42,158 16,255 Long-term sites Read more on pages 6 to 13 4 Berkeley Group 2020 Annual Report Our Portfolio Sites under construction Future sites Total sites in the land bank 70 28 98 Out of London 27 Princes Chase, Report Strategic Leatherhead under construction 1 17 – 51 London Road, 28 Quinton Court, Staines Sevenoaks 2 Abbey Barn Park, High 29 Royal Clarence Marina, Wycombe Gosport 3 Broadacres, Southwater 30 Royal Wells Park, Tunbridge Wells 4 Bersted Park 31 Snow Hill Wharf, 5 Barleycroft, Rudgwick Birmingham 6 Brompton Gardens, 32 Taplow Riverside Ascot 33 The Arches, Watford 7 Courtyard Gardens, Oxted 34 The Paperyard, Horsham 31 8 Cranbrook 35 The Waterside, 7 WEST Royal Worcester MIDLANDS E 9 Edenbrook Village, Fleet Corporate Governance IR CAMBRIDGESHIRE