The Berkeley Group Aktie

Good morning, ladies and gentlemen, and welcome to the Berkeley Group Interim Results Presentation for the 6 months ended 31st of October 2025. This is my first results announcement as Executive Chair and my 50th since first joining the Board in 2001, which seems fitting as we look forward to celebrating Berkeley's 50th anniversary in 2026.

I will shortly hand over to Richard Stearn, our Chief Executive; and our new CFO, Neil Eady, to review the first half of the year and what has been a highly credible performance in a challenging trading environment.

As we look ahead to our anniversary year and an exciting future, Berkeley's DNA remains grounded in our added value philosophy. Our Berkeley 2035 strategy provides us with an agile capital allocation framework to make the right decisions across the cycle to create long-term shareholder value.

Berkeley has an unique position in London development market through its scale, experience and expertise, and we're determined to play a full part in helping government meet its growth ambitions and housing targets.

In London, this means increasing starts tenfold to over 80,000 per annum and GBP 1.5 million across the country over the course of this parliament. It must, however, be recognized that since 2015, successive governments have seen property ownership as a source of increased revenue, coupled with higher corporate and development taxes. This has and will continue to constrain viability and investment.

Notwithstanding this, I've been greatly encouraged by and I'm in full support of government's recent policy initiatives and their commitment to reduce regulation, including the Homes for London package launched in conjunction with the GLA. It is critical that these initiatives move at pace alongside a reduction in the tax burden if their objectives are to be met.

I will now hand you over to Richard Stearn, our Chief Executive.

Thank you, Rob, and good morning, ladies and gentlemen. I will cover the following key areas today. First, I'll start with the resilient results delivered for the 6 months before looking at what continues to be a complex and challenging operating environment. Next, I'll touch on the inherent value within Berkeley and how Berkeley 2035 provides the flexible capital allocation framework to drive shareholder value over the cycle using our added value approach.

I will also set out why we are so positive on the long-term outlook for the London market, both for sale and for rent. And I will then look at our current operational priorities and how this influences capital allocation. I'll also provide an update on our BTR platform before concluding with our guidance.

Berkeley has delivered a resilient set of results for the first 6 months of this financial year. Pretax profit is GBP 254 million. We closed the period with net cash of GBP 342 million after returning GBP 132 million to shareholders through share buybacks. Our net asset value per share has increased by 5% to GBP 37.63. We have provided over GBP 220 million of subsidies to deliver affordable housing and community infrastructure, and our Net Promoter Score remains industry-leading. This performance reflects the operational capabilities of our teams, the quality of our market-leading homes and the strength of our unique long-term business model.

And so the operating environment remains complex and challenging. At a high level, government policy is very supportive, but the regulatory burden is not reducing at the pace we would like and general sentiment remains fragile, not helped by the uncertainty leading up to last month's budget. Yet the feel good factor is within reach, but does need interest rates to fall and positive economic momentum to return.

In terms of sales, in our September AGM update, we noted that trading levels were stable. However, unsurprisingly and as widely reported, the market has been more subdued in the months leading up to the budget. Overall, sales for the half year are around 4% off the same period last year, still some 30% down over the last 2 years. However, there are encouraging signs. Customer interest, evidenced by inquiries and leads, is consistently good. With the budget uncertainty now behind us, we look forward to interest rates resuming their downward trajectory.

Combined with the real wage growth of recent years and high savings ratios, this should improve affordability and sentiment, both important prerequisites for customers to be confident to commit to property purchases.

Build costs have remained flat during the period, amid a competitive tendering environment. In terms of legislation, the BSR's Gateway 2 system does remain protracted. Positively, there is renewed impetus to speed up the process, driven by the revitalized leadership team at the BSR, and there are signs of improvement. We look forward to this translating into consistent, timely and reliable building approvals.

We have obtained 3 new planning consents for some 1,800 homes alongside over 30 revisions that improve our existing consents. Overall, well over 90% of our land holdings have a planning consent that underpins a backstop position, and this provides an excellent platform from which to add value. We have also acquired 2 new conditional sites that represent long-term opportunities, and these have been added to the pipeline.

This slide sets out the key features of Berkeley's business model with its long-term value proposition and cash generation potential. Berkeley's scale and position in the London market are unmatched. This gives us a clear advantage in one of the world's most resilient property markets. Some 90% of our activity is on brownfield land and so fully aligned to government's brownfield-first approach to addressing the housing crisis.

Berkeley has deep London expertise and strong relationships that enable us to navigate complex planning and delivery challenges effectively in a market with high barriers to entry. We are an added value developer, maximizing value on a site-by-site basis, which differs to a volume-based growth model.

Our brand is synonymous with delivering exceptional developments that create long-term value, which gives Berkeley its reputation for delivery with local communities and customers alike. We expect this to translate into our Berkeley Living rental platform, too.

Finally, sustainability and delivering value for a diverse range of stakeholders is at the heart of our business, and this reinforces our reputation. Our Berkeley 2035 strategy set out on the right-hand side of this slide provides the financial agility to allocate capital at the right point in the cycle to deliver long-term value for shareholders through its 3 key value drivers.

Despite the complexity of today's operating environment, we remain positive on Berkeley's long-term value proposition, given the structural factors at play in our core market. London is a global powerhouse city with a resilient and adaptive economy. It attracts international capital, talent and business, which supports sustained housing demand.

London remains the biggest financial center in Europe and attracts almost 3x as much foreign direct investment as any other European city. It is also the top-ranked city for inbound real estate investment and second globally.

Oxford Economics ranks London as the #1 city worldwide for human capital. And of course, London is second to none in terms of heritage, culture and restaurants, green open spaces and education as well as a reputation for diversity and fairness, all supported by a legal system that is admired around the world.

On the sales side, there is a persistent undersupply of new homes. You will be familiar with this data, a selection of which is captured in the appendices to these slides. Falling interest rates, a competitive mortgage market and improving affordability will all underpin demand.

For rental, the same undersupply exists. We're seeing an occupational trend toward renting and policy increasingly favors institutional landlords. In addition to the institutional appetite for capital investment in the living sector is undiminished with its low-risk inflation-linked income stream.

As I said earlier, government policy is supportive. The fall in supply in London is acute and the package of measures announced by MHCLG and the GLA in October is a positive step towards restoring development viability and getting more homes into production. The package includes a reduction in the benchmark level of affordable housing, reductions in community infrastructure levy and positive changes to the London plan design guidance.

We await final details following the consultation period, and its ultimate success will depend upon the speed, scale and duration of implementation. These structural drivers present a compelling backdrop for Berkeley's long-term value creation potential.

On this slide, I have set out our operating priorities in today's environment and how this impacts capital allocation. First, on operations. We remain focused on operating margin and cash generation. We are advancing BSR Gateway 2 applications on buildings that are for delivery between FY '29 and FY '31. We are also driving optimization, replanning sites to recover or enhance returns where conditions have eroded gross margins. Finally, we continue to progress planning on our long-term land holdings to secure our future development pipeline.

On capital allocation in this environment, we will carefully align delivery to demand and the pace of BSR Gateway approvals. Developing out our BTR platform is a key focus with 1,100 rental homes scheduled for delivery by the end of FY '28. We are seeking new land opportunities that reflect today's conditions and are value accretive. These will predominantly be on a conditional basis. Where site returns cannot be improved, we will recycle capital through disposal.

And finally, we are committed to our shareholder return program, prioritizing share buybacks in the current environment where we see value. These priorities ensure we maintain a strong financial base while positioning the business for attractive shareholder returns over the Berkeley 2035 period.

Berkeley is moving at pace to create a market-leading build-to-rent platform, which reflects our passion for customers, quality and communities. We have transferred 2 further buildings into the platform in the period, both in Zone 3 in North London at our Grand Union and Silk Stream developments. Therefore, Berkeley already has over 25% of the initial target 4,000 home portfolio transferred to the platform and in production.

We will be launching our first development in spring next year, 187 homes for rent at Foundry Yard, Alexandra Gate in Haringey. As indicated in our full year results announcement in June, we are planning to launch a further 3 buildings to the rental market during the course of 2026.

In terms of the Renters' Rights Act, we see this as a major step in professionalizing the U.K. rental sector, and Berkeley Living is fully aligned with its requirements.

I have included a number of BTR slides in the appendices. These set out, firstly, how Berkeley is capturing full value from this new sales channel through developing its own operating platform, which we covered in the June results. And secondly, some slides setting out the current market characteristics, which are favorable in terms of both the occupational and institutional capital perspectives.

Rents are forecast to grow by 3% in London in 2026 and 4% per annum for the following 3 years. Institutional investors are looking to increase their asset allocations to the living sector at a time when new supply in London is falling.

Finally, this slide brings together our guidance. We remain on target to meet our pretax profit guidance of GBP 450 million for both FY '26 and FY '27. We expect operating margins to be in the historic range of 17.5% to 19.5% over this period. We are targeting net cash of around GBP 300 million at the end of FY '26, but this will depend upon the pace of investment in new land and share buybacks. And this will be after a further GBP 175 million is spent on land creditors in the second half of the year, reducing the outstanding balance to below GBP 500 million.

Under Berkeley 2035, our next return hurdle is GBP 640 million over the 5-year period to September 2030. In terms of capital allocation, based on our current financial position and operational focus, coupled with the dislocation in the share price, we will be prioritizing shareholder returns in this environment.

Thank you. And I will now hand over to Neil to take you through the numbers in more detail.

Thank you, Richard, and good morning, everyone. I'm Neil Eady, Berkeley's new CFO. I will take you through the results today, beginning with a summary, then drilling down on the income statement, cash flow and balance sheet.

Starting with a summary of performance for the period. We have delivered GBP 254 million of pretax profit in the first half of the year, which is slightly ahead of our guidance in the September trading statement and reflects a front half weighting of the annual profit due to timing of completions.

Earnings per share has decreased by 1.7% to 184p, reflecting lower profit, largely offset by share buybacks of GBP 132 million in the period.

Operating margin is 20.8%, slightly higher than the comparative period due to the aforementioned first half weighting. Pretax return on equity is 14.2%, with return on capital employed of 15.5%.

Turning to the balance sheet. Net assets are GBP 3.6 billion. The increase of GBP 39 million in the period principally reflects the profit after tax of GBP 179 million, exceeding shareholder returns of GBP 132 million.

Net cash remains healthy at GBP 342 million with overall liquidity, therefore, in excess of GBP 1.5 billion. Net asset value per share has increased by 5% to GBP 37.63, as a consequence of the net asset movement just mentioned and most significantly, the buyback of 3.5 million shares.

This slide sets out some of our key operational metrics. Firstly, we have cash due on forward sales of GBP 1.1 billion. This provides good visibility on near-term earnings and cash flow, with 95% of sales for FY '26 already secured. As a reminder, this figure represents the cash still to collect on our exchange private sales only. It's therefore a cash, not a revenue figure and excludes exchange deposits, affordable homes, institutional sales and commercial property.

Our customer deposit strategy remains 20% for forward sales. Over 40% of the forward sales cash relates to this financial year and the remainder thereafter. The second important metric on this slide is the estimated future gross margin in our land holdings, which has reduced by GBP 210 million to GBP 6.5 billion from 51,719 plots. I will look at this movement later.

Turning now to the income statement and comparing this to the first half of last year. Revenue has decreased by 8% to GBP 1.2 billion with lower volumes and lower ASP. Gross profit is GBP 319 million, representing a gross margin of 27.0%, slightly ahead of the comparative period.

Operating expenses have decreased by 8% to GBP 74 million despite what remains an inflationary environment as we continue to focus on efficiency and exert close control on all areas of cost.

Operating margin is 20.8%, slightly higher than the comparative period and above our long-term range of 17.5% to 19.5%. With profits slightly weighted to the first half of this year, operating margin is forecast to moderate for the full year to a level within the long-term range.

Our net finance income is GBP 3 million compared to GBP 10 million in the comparative period, with interest earned on gross cash falling principally as a result of lower interest rates, but still exceeding our blended cost of debt, which includes our green bond with its 2.5% coupon.

With St Edwards now delivering out of London sites only, our share of joint venture profits are GBP 6 million. It will remain at or below this more modest level over the guidance period.

The effective tax rate for the period was 29.7%, which fully reflects both the corporation tax rate of 25% and the 4% residential property developer tax.

Drilling down to volume and ASP. We completed 2,022 homes at an average selling price of GBP 570,000 in the period. This compares to 2,103 homes at an average selling price of GBP 600,000 in the first half of last year. As always, the change in ASP reflects the mix of properties delivered in the respective periods, both tenure and location rather than underlying sales price movements.

Looking ahead, we reiterate our guidance for this current year, which is for volumes to be marginally lower and ASP around 5% lower than FY '25. In the following year, FY '27, volumes will be a little lower again, but pricing will be around FY '25 levels.

Moving to the cash flow. This slide sets out the key movements for the half year, which results in an increase in net cash of GBP 5 million to GBP 342 million. GBP 254 million has been generated from pretax profits, of which GBP 93 million has been absorbed by a net increase in working capital investment.

I will run through the key movements within working capital shortly. The other significant items are the GBP 40 million distribution from the St Edwards joint venture and the GBP 132 million of shareholder returns through share buybacks. We are looking to retain net cash of around GBP 300 million at the end of FY '26, as Richard said, subject to the pace of investment in new land and share buybacks.

I will not go through each line on this balance sheet slide as I will run through the 2 key numbers, inventory and creditors in the next 2 slides. The other notable balance is investment property at GBP 260 million, reflecting our investment to date on the first 6 BTR assets, 2 of which were transferred to the BTR platform in the period.

As previously explained, we have adopted the cost option within IAS 40, and so we'll not revalue these assets in the balance sheet, but we will provide information on market value at the balance sheet date as the portfolio matures.

Drilling down into inventory. This slide sets out the GBP 146 million net decrease in inventories in more detail. Land and work in progress has decreased by GBP 112 million, of which GBP 82 million relates to the transferring of 2 additional BTR assets into investment property. Within this balance, the overall land cost has decreased by GBP 61 million.

Land not under development has risen by GBP 28 million following the completion of the acquisition of a site in Hersham, Surrey. Build WIP has moderated slightly as we continue to match production to demand. Completed stock reduced by GBP 33 million in the period to GBP 305 million. This is spread across a number of sites, providing immediately available product for prospective purchases.

Creditors have decreased by GBP 155 million in the period. First, there has been a decrease of GBP 86 million in customer deposits, driven by the difference between current sales rates and the amount of revenue taken to the profit and loss account. The second significant movement is the net GBP 73 million reduction in land creditors, with GBP 80 million settled in the period.

The slide also sets out the future payment profile for the remaining GBP 640 million of land creditors, which are largely unchanged in the period. A further GBP 175 million of land creditors will be settled in the second half, totaling circa GBP 250 million for the year.

Scheduled land credit payments in FY '27 totaled GBP 90 million, with a similar annual profile thereafter. Provisions representing post-completion development obligations, including those related to build fire safety matters, have increased by GBP 6 million in the period.

In terms of our financing, the group's borrowing capacity of GBP 1.2 billion is unchanged from the year-end and comprises GBP 400 million of 2031 dated green bonds, with a 2.5% coupon, an GBP 800 million bank facility consisting of a GBP 260 million drawn green term loan and a GBP 540 million undrawn revolving credit facility. These bank facilities are in place to February 2029. At the period end, Berkeley had net cash of GBP 342 million and therefore, total available liquidity of GBP 1.5 billion.

This slide summarizes our landholdings. Estimated future gross margin is GBP 6.5 billion across 52,000 homes on 60 sites, down from GBP 6.7 billion and 53,000 at 30th of April '25. This means we have replaced GBP 0.1 billion of the GBP 0.3 billion of gross profit delivered through the income statement in the period through replanning activity and market movements.

New planning consents were secured at 3 sites, 900 homes at Borough Triangle, around 500 homes at the former Brighton Gasworks site and the third site at Hemel Hempstead moved from the pipeline into land holdings following receipt of planning consent for 500 homes. The pipeline now comprises of approximately 14,000 plots and includes 2 new sites, both subject to planning, added to the pipeline given the anticipated time scales to secure viable planning consents.

In summary, this slide reinforces Richard's earlier comments about Berkeley's unique market position, underpinned by circa 66,000 plots in our land holdings and pipeline. When combined with our net cash of GBP 342 million and liquidity of over GBP 1.5 billion, we are in a great position to deliver the Berkeley 2035 strategy.

Thank you very much. This concludes today's results.

Good morning, ladies and gentlemen, and welcome to Berkeley results presentation for the year ended 30th April 2025. I am Rob Perrins, Chief Executive of the Berkeley Group. I will cover 4 areas today.

Firstly, Berkeley has delivered a strong performance with our results in line with guidance and on track for full year 2026. Secondly, government policy is increasingly supportive and the planning environment is improving. We welcome the positive steps taken so far, but there remains some key challenges to resolve if we are to realize the universally held ambition of increasing housing supply. These include accelerating the completion of Section 106 agreements and clearing pre-commencement conditions as well as speeding up the building safety regulators new gateway approval system.

Thirdly, we announced in December our new 10-year strategy, Berkeley 2035. And we have made excellent start laying down the foundations for delivering shareholder value over the long term. I'm particularly pleased with the progress made in establishing our own market-leading build-to-rent platform, which I will cover later. Finally, we have adapted our business plan to current market conditions and the operating environment we have experienced over the last 18 months. This is reflected in our medium-term guidance, which is unchanged.

I am positive about the long-term outlook for Berkeley, and we have a clear, agile framework for capital allocation, which will enable us to create shareholder value over the next 10 years while navigating short-term volatility. The operating environment remains volatile and sentiment is finally balanced, given the geopolitical and macroeconomic backdrop. But there are plenty of reasons to be positive about the long-term outlook.

In a very unsettled world, London remains a world-leading city where people aspire to live and want to invest. Market fundamentals are strong, both for sale and for rent, with incomes rising, coupled with huge undersupply of new homes. The mortgage market is also strong with very good availability, higher borrowing limits and interest rates decreasing, and they are forecast to come down further in the medium term.

The government has placed housing supply at the center of its growth agenda with a clear brownfield first commitment and a number of positive policy initiatives now underway. This was reinforced at last week's spending review, which confirms a significant increase in affordable housing funding and key measures to strengthen housing associations' finances. The government's sustained focus on housing delivery has triggered a more positive mindset and approach within the planning system with a renewed focus on achieving viable planning consents, which embrace higher densities and maximize affordable housing delivery. In this improving environment, we are bringing forward planning applications across all of our portfolio and pipeline to accelerate and increase delivery.

However, to achieve the government's ambition, it will require focused action in a number of key areas. We need planning authorities to agree realistic and deliverable development priorities that reflect the operating environment we are in today. This includes using Section 106 agreements instead of charging the community infrastructure levy on complex brownfield sites. This approach would make a huge difference, enabling more affordable homes to be delivered and reflecting the very significant on-site infrastructure and amenities these sites deliver.

Removing duplicate layers of policy and withdrawing prescriptive and inefficient design guidance would also be a significant step forward. The process of finalizing planning consents after the planning committees have approved them must be faster and more certain, including the completion of Section 106 agreements and clearing pre-commencement conditions. And the building safety regulators new gateway approval system for tall buildings must be dramatically improved and sped up. This needs to be resolved quickly, and this is a key barrier to delivering homes in this parliament.

We also need all levels of government to recognize that ongoing regulatory change will increase risk and uncertainty, which will in turn deter investment and reduce housing supply. High levels of stamp duty are a drag on transaction levels and the level of corporation tax, along with the residential property tax means the effective tax rate on our profits totaled 29%, making an investment less attractive. These challenges are all solvable, and we are working with government to help them deliver against their objectives.

Overall, I'm therefore positive on the long-term outlook, given the market fundamentals, which underpin Berkeley's 2035 strategy, which provides an agile capital allocation framework to enhance investment in the near term to increase profits and shareholder returns over the long term. The strategy targets investment of up to GBP 5 billion in London, Birmingham and the South-East of England and return to shareholders of at least GBP 2 billion over the next 10 years. In the short term, we all know that consumer confidence is finally balanced and remain sensitive to the economic and geopolitical backdrop. In our view, the all-important feel-good factor is now within reach, and this government can achieve its growth mission through nurturing positive sentiment.

Operating performance in this period has been extremely resilient. Sales rates have improved gradually over the year with successful launches at Trillium in Marylebone, Bermondsey Place in Southwark and TwelveTrees Park in Newham. Sales prices are stable as are our build costs with subcontractors absorbing any underlying inflation on materials and labor. We have reduced overheads by 3% in an inflationary environment.

We're also investing for the future. We have acquired 3 new sites. We are focusing on accelerating planning activity, as I noted earlier, and I'm delighted that we have obtained 5 new consents alongside over 30 revisions that improve our existing consents. We have moved 5 sites into production, and we have transferred some 800 new homes across 4 sites onto our Build to Rent platform, which I'll cover on the next slide.

Berkeley has moved at pace to create a market-leading Build to Rent platform, which reflects our passion for customers, quality and communities. We already have around 20% of the initial 4,000 homes transferred to the Build to Rent platform. This is 800 homes across 4 sites with a further 2 sites exchanged since the year-end. These homes have been delivered across well-located urban regeneration sites within strong rental markets.

We have appointed the operational Board, a mixture of existing Berkeley directors and 3 external hires from the Build to Rent industry. We have developed a high-quality amenity offer for each site and a bespoke Build to Rent specification. This slide depicts the internals of Horlicks Quarter in Slough. We'll be launching our first development in the spring next year, 187 homes for rent at Alexandra Gate in Haringey.

This slide shows our Build to Rent brand, Berkeley Living, which leverages Berkeley's existing brand strengths while establishing a distinct identity as we target the rental market. Our brand offer is based on exceptional customer service, build quality and the highest standards of placemaking. In other words, we'll be offering the Berkeley experience to the rental market.

Our Build to Rent communities will benefit from welcoming and attractive places, well-connected urban locations and high-quality private amenities and co-working spaces. We will offer a seamless customer experience based on digital communication and highly trained in-house customer service teams. We will also provide a mix of community events and activities to help establish a welcoming social environment for our residents to enjoy.

Finally, this slide brings together our guidance. We remain on target to meet our guidance for full year '26, with full year '27 likely to be similar based on current market conditions. We expect operating margins to be in the historic range over this period. Under Berkeley 2035, we have a minimum shareholder return target of GBP 2 billion by September 2034, with the first GBP 900 million to be returned by September 2030. GBP 260 million of this is due to be paid by September 2025. With GBP 139 million of this paid prior to the year-end, GBP 121 million remains to be paid by the end of September. This will also complete the 2011 shareholder returns program. Our next return hurdle is GBP 640 million over the next 5-year period to September 2030 to complete the first GBP 900 million under Berkeley 2035.

Net cash will depend upon the pace of investment in new land and share buybacks. We are targeting net cash of around GBP 300 million at the end of full year '26. This will be after a further GBP 250 million is spent on land creditors, reducing the outstanding balance to below GBP 500 million. Cash joint forward sale is likely to moderate further in current market conditions. And finally, the future gross margin in our land holdings will be above GBP 6 billion at the end of full year '26.

Thank you very much. And I will now hand over to Richard Stearn, our Chief Financial Officer.

Thank you, Rob, and good morning, everyone. I will take you through the results today, beginning with a summary, then going through the drivers of revenue and profitability before looking in more detail at the income statement, cash flow, balance sheet and land holdings, then concluding with the BTR strategy.

Beginning with a summary of performance for the year, we have delivered GBP 529 million of pretax profit, in line with our guidance at the start of the year. Earnings per share decreased slightly to GBP 3.72, reflecting lower profit, partially offset by share buybacks in the year and September share consolidation. The operating margin at 20.1% is consistent with the first half and slightly higher than last year. Pretax return on equity was 14.9% with return on capital employed of 16.5%.

Looking at the financial position of the group, shareholders' funds of GBP 3.6 billion, unchanged in the year with profit after tax of GBP 382 million being offset by shareholder returns at a similar level. Shares in issue, net of treasury and those held in the EBT have reduced by 6.5% to GBP 99 million. This is due in equal parts to share buybacks and the September share consolidation. As a consequence, net asset value per share has increased by 7% to GBP 35.95. Net cash is a healthy GBP 337 million, and I will talk through the drivers of this later.

This slide sets out our 2 key operational metrics. First, we have cash due on forward sales of GBP 1.4 billion. This provides strong visibility on near-term earnings and cash flow with over 75% of sales for FY '26 already secured. As a reminder, this figure represents the cash still to collect on our exchanged private sales only. It is therefore a cash, not a revenue figure and excludes reservations.

Our customer deposit strategy remains 20% for forward sales. And the forward sales figure excludes affordable housing, institutional sales and commercial properties as well as joint ventures. Around 2/3 of the forward sales relate to FY '26 and the remainder thereafter. The second important metric on this slide is the estimated future gross margin in our land holdings, which is reduced by GBP 200 million to GBP 6.7 billion. I will look at this movement later.

This slide highlights the key components of revenue and profitability. We sold 4,047 homes at an average selling price of GBP 593,000 in the year. This compares to 3,521 homes at an average selling price of GBP 664,000 last year. As ever, the change in ASP reflects the mix of properties delivered in the respective years as opposed to underlying sales price movements.

Looking ahead, we expect volumes to be marginally lower and ASP around 5% lower next year. In the following year, FY '27, volumes will be a little lower again, but pricing will be closer to FY '25 levels. Operating margin will be within the historic range and together with reduced contributions from JVs and interest income, you get to the guidance Rob gave a few moments ago for the next 2 years. It's clearly difficult to be more specific in these markets. And as we've said many times, we will always prioritize cash flow and quality of profit ahead of annual profit targets.

Turning now to the income statement and comparing this to the previous year. Revenue is similar at GBP 2.49 billion with higher volumes being partially offset by lower ASP as just set out. Gross profit is GBP 660 million, representing a gross margin of 26.6%, slightly ahead of last year. Operating expenses have decreased by 3% to GBP 160 million in what remains an inflationary environment as we continue to exert close control on all areas of cost. Our operating margin is 20.1%, higher than last year and above our long-term range of 17.5% to 19.5%. Our net finance income is GBP 14 million compared to GBP 12 million in the prior year, with interest earned on gross cash exceeding our blended cost of debt, which includes our Green Bond with its 2.5% coupon.

Looking forward, net interest will moderate in line with interest rate expectations. Our share of joint venture profits was GBP 15 million, which is reduced as previously guided. With St Edward now delivering out of London sites only, it will remain at or below this more modest level. The effective tax rate for the year was 27.8%, and this fully reflects both the corporation tax rate of 25% and the 4% residential property developer tax.

This slide sets out the cash flows for the year, which show a decrease in net cash of GBP 195 million to GBP 337 million. GBP 529 million was generated from pretax profits with a GBP 216 million net decrease in working capital. I will run through the key movements within working capital shortly. The other significant item is the GBP 381.5 million of shareholder returns, which comprises GBP 130 million of share buybacks, GBP 68 million of ordinary dividend and September's GBP 184 million special dividend. We are looking to retain net cash at around GBP 300 million at the end of FY '26.

I will not go through each line on this balance sheet slide as I will run through the 2 key numbers, inventories and creditors, in the next 2 slides. The other notable balance is investment property at GBP 146 million, reflecting our investment to date on the first 4 assets, which have been transferred to the new BTR platform. This has been transferred from inventory at cost and includes the relevant allocation of existing land and site costs as well as around GBP 85 million spent on construction in the year. As previously explained, we've adopted the cost option within IAS 40, and so we'll not revalue these assets, but we will provide information on market value as the portfolio matures.

This slide analyzes the GBP 232 million net decrease in inventories in more detail. This comprises a reduction in land and work in progress of GBP 359 million, of which GBP 144 million relates to the transfer of the first 4 BTR assets to investment property, as just shown on the previous slide. This reduction is partially offset by a GBP 127 million increase in completed stock.

The overall land cost in the balance sheet has decreased by GBP 194 million with 3 sites acquired in the year. We have also moved 5 sites into production with Trillium in Marylebone moving in the second half of the year. Completed stock is at similar levels to the half year and is spread across a number of sites, providing immediately available product for those in the zone to move and for when the market inflects.

Creditors have decreased by GBP 321 million in the year, and this slide sets out the 2 key movements. First, there's been a decrease of GBP 196 million in customer deposits. This reflects both the mismatch between current sales rates and the amount of revenue taken to the profit and loss account. And secondly, the completion of institutional sales at 2 of our sites. The second significant movement is the net GBP 168 million reduction in land creditors with GBP 213 million settled in the year.

The slide also sets out the future payment profile for the remaining GBP 714 million of land creditors. As previously noted, some GBP 250 million is being repaid in FY '26 with a gentler profile thereafter. Provisions representing post-completion development obligations, including those related to building fire safety matters, have increased by GBP 20 million in the year.

In terms of our financing, the group's traditional borrowing capacity of GBP 1.2 billion is unchanged from last year. It comprises GBP 400 million of 2031 dated Green Bonds with a 2.5% coupon and an GBP 800 million banking facility, which consists of a GBP 260 million drawn Green Term Loan and a GBP 540 million undrawn revolving credit facility. These bank facilities are in place to February 2029. At the year-end, Berkeley was ungeared on a net basis with net cash of GBP 337 million and total available liquidity, therefore, of just over GBP 1.5 billion. We have a borrowing facility with Homes England for the financing of infrastructure costs on 3 of our London developments. This facility totals GBP 126 million and GBP 18 million was drawn at the end of the year.

This slide summarizes our landholdings. Estimated future gross margin is GBP 6.7 billion across 53,000 future homes on 64 sites, down from GBP 6.9 billion and 54,000 at the 30th of April 2024. This means we have replaced GBP 0.5 billion of the GBP 0.7 billion gross profit delivered through the income statement in the year. The GBP 0.5 billion comes from a combination of the 3 sites added, planning optimizations, including net pipeline progression and market movements.

We've secured 5 new planning consents in the year and over 30 amendments to existing consents. Most notable among these are the consent for 2,150 new homes at Bromley-By-Bow, which we transferred from the pipeline and additional homes at TwelveTrees Park, London Dock and Poplar Riverside. The pipeline now comprises 12,000 plots.

Given its importance to Berkeley 2035, I've included some slides on the BTR strategy. Rob focused in his speech on the progress with the operating platform, and I wanted to reaffirm the financial characteristics underpinning the strategy. First and foremost, this is an additional sales channel for Berkeley that capitalizes on structural shifts in the housing market and investor appetite. There are some slides on this in the appendix with data with which you will likely be familiar. What I wanted to focus on here is the attraction for Berkeley.

First, our landholdings are ideally suited to BTR through their location and overall design. Through this strategy, we are able to accelerate delivery and move through our sites more quickly with a beneficial impact on placemaking and animation. It is incremental to our core for sale business. Next, it is in line with government policy, which wants to see a greater variety of housing tenures, and this should assist in planning discussions. The final point is how our strategy allows us to maximize value from this opportunity, which I'll summarize on the next slide.

So this slide looks at a snapshot of the development cycle and illustrates how we are looking to maximize value by creating a stabilized institutional asset. Under a traditional forward fund model, there can be value leakage of up to 20% of open market value as pricing is fixed based on early rental assumptions and a yield that includes an allowance for delivery risk. By holding the asset over the relatively brief period of stabilization, we can fully capture the value drivers for shareholders. In this example, 3 to 4 years of rent inflation and yield compression to reflect a proven income-generating asset.

Of course, the longer stabilized assets are held, the more development returns may be diluted from a ROCE perspective. With our own platform, we have the flexibility to dispose of the assets or introduce third-party capital at the most value-accretive point. This might be through individual building sales, sales of many portfolios, the introduction of third-party capital where we may continue to manage or simply the introduction of gearing linked to the income generation. All routes provide optionality to dispose at any point in the market cycle in order to maximize returns for shareholders.

For modeling purposes at this stage, very broadly, I see around 1,000 homes being completed by the end of FY '28 with the remainder progressively over the following 5 years. This is, of course, subject to change, but gives an indication of current trajectory. Build cash will be highest in the middle years.

Thank you very much. This concludes today's results presentation.