Berkeley Share Discussion Threads

[r ball] 19/7/2017 16:17

Nothing to say really. I don't have Bloomberg (info service) so don't know reason for uptick. Before Brexit thought they could have hit £45 by now.

[jrphoenixw2] 19/7/2017 16:01

Touched a new 52-week high of 3425p this afternoon.

[1gw] 19/7/2017 15:32

Crossing £34 again surely worth a post?

[r ball] 19/7/2017 15:27

No reason to sell?

[r ball] 14/7/2017 08:29

Buy back curtailed by afternoon price action?

[jrphoenixw2] 14/7/2017 07:12

'Date of transaction: 13 July 2017
Number of Shares purchased: 46,465
Highest price paid per Share: 3290p
Lowest price paid per Share: 3260p
Volume weighted average price paid per Share: 3279.1525p
Broker: UBS
The Company intends to hold the purchased Shares in Treasury. Following the purchase of these Shares, the Company holds 3,354,937 of its Shares in Treasury and has 136,802,246 Shares in issue (excluding Treasury Shares).'


= £1.524million

[jrphoenixw2] 13/7/2017 13:16

No probs. I'm not too bothered either, for the time being, pre-retirement. I don't *enjoy* the opacity of how the buy-backs function but realise they have to have opacity for max impact.

@ RBall. Presumably they're being paid a material proportion in stock, options and likely long-term tied in incentive comp. Tony P has £180million of shares, I'd say his interests are veeery closely aligned with other longs.
Don't know all the variables at play in their comp, EPS or some blend. FWIW the place I worked the main driver for any bonus was ROE for the division through a prism of personal performance versus a selected unpublished peer group each of whom rated you each year. Certainly kept you on your toes trying to guess which random colleagues you were competing with vs the bonus pool :) That was all in the name of 'Aligning employee remuneration with shareholder value' and c15/+ years ago now. I expect that such a then cutting edge approach has since trickled down far and wide into the corporate sector.

ps Just pondering how tricky it is to spot buy-backs as they happen. There was a chunk of volume at c11.30am that lifted the price from 3260. We'll see!

[r ball] 13/7/2017 11:39

Me too. But directors pay needs to be linked to Eps adjusted for sharebuybacks.

[dr_smith] 13/7/2017 10:44

Cheers Jrphoenixw2. Personally not too bothered as to split between div or cap gain, can always sell shares if more income needed (tax issues acknowledged), so provided company ethos is efficiency driven, I am happy.

[jrphoenixw2] 13/7/2017 10:22

@DR Smith 'IMV, buybacks do not affect a companies profitability, but can mean less spare cash, so less likely to pay larger divs than the norm, so it could be said cap gain likely to increase for investor at expense of Divs.'

The sum for the cash-return/div is fixed annually through 2021, it's simply the proportions returned in cash or via buy-backs that are in play. The 'Capital return programme' which IIRC was extended/raised in Dec-2015 was based on existing forward sales meaning they expect excess capital/cash vs plans to spend it.

DR-Smith: 'Sentiment/sp is a reflection of co profitability/prsopects, so by maximising profitability/efficiency of use of spare cash, they are maximising value for shareholders. IMO :-)'

Agreed with that, and if you look back through how they framed the plan that's what they're aiming for. I agree not knowing what future cash divs are isn't ideal, perhaps especially if you're budgeting on presently needing to live off that income. I console myself that that day is still a couple of years off. And that the Board are also major share-holders, so they're getting their share of pain/uncertainty/etc too, but they're doing it for our collective good, and for the long-term.

[jrphoenixw2] 13/7/2017 10:09

Maybe worth recapping how BKG originally framed it in their Interim Results a/o Dec 2016.

'SHAREHOLDER RETURNS PROGRAMME
The Board of Berkeley has reviewed the mechanism for making the remaining £10.00 per share payments under the Shareholder Returns Programme that was put in place in 2011, and enhanced this time last year from £13.00 per share to £16.34 per share. The current heightened macro uncertainty has led to significant market volatility and there is a dislocation between this and both underlying market conditions and the strength of Berkeley’s operating model.
As a consequence, the Board is proposing to introduce flexibility such that the remaining £10.00 per share payments can be made through a combination of share buy-backs and dividends, as opposed to solely dividends. This recognises that, at certain price points, the Board is of the opinion that the Company is materially undervalued and share buy-backs will be in the best interests of all shareholders. In making this change, the Board is also proposing that the payments should be re-characterised from being a value per share, to be an absolute value per annum. This ensures that the same quantum of cash will be returned as previously anticipated, but on a smaller number of shares, to the extent share buy-backs occur. This absolute value will be increased appropriately for any new shares issued.
[page 1]

THE BERKELEY GROUP HOLDINGS PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2016
[page2]
£ per share £’million
Paid to date £6.34 £854.9
By 30 September 2017 £2.00 £277.7
By 30 September 2018 £2.00 £277.7
By 30 September 2019 £2.00 £277.7
By 30 September 2020 £2.00 £277.7
By 30 September 2021 £2.00 £277.7
To come * £10.00 £1,388.5
Total £16.34 £2,243.4
* based on a net 138.8 million shares in issue as at 31 October 2016
The Board believes that this change will ensure that Berkeley’s shareholders fully benefit from the value embedded in the business. The Company will consult with Shareholders on consequential changes to the 2011 LTIP to ensure this reflects these changes, prior to a General Meeting of the Company in the New Year.

[page 3 from the ‘Chairman̵7;s statement’]
At the same time the Board is proposing to introduce flexibility to the Shareholder Returns programme so that future returns can be made by either dividends or share buy backs, as opposed to solely dividends, to the extent the Board believes the prevailing share price materially undervalues the Company and that such purchases would be in the best interests of all shareholders. It remains the intention of the Board to return £2 per share per annum over the next five years under this new mechanism and, for the avoidance of doubt therefore, this is not a reduction in the overall returns allocated to shareholders.

[Chief Exec Statement – page 5]
The Board of Berkeley has now reviewed the mechanism for making the remaining £10.00 per share payments in light of its assessment that the current short-term macro volatility is preventing the long-term value of Berkeley being recognised by the market. As a consequence, the Board is proposing to introduce flexibility such that the remaining £10.00 per share payments can be made through a combination of share buy-backs and dividends, as opposed to solely dividends. This recognises that, at certain price points, the Board is of the opinion that the Company is materially undervalued and share buy-backs will be in the best interests of all shareholders. In making this change, the Board is also proposing that the payments should be re-characterised from being a value per share, to be an absolute value per annum. This ensures that the same amount of cash will be returned as previously anticipated, but on a smaller number of shares, to the extent share buy-backs occur. This absolute value will be increased appropriately for any new shares issued. [same time-table as laid out above in Chairman’s Statement]
The Board believes that this change will ensure that Berkeley’s shareholders fully benefit from the value embedded in the business.
In February and August each year, the Company will announce the dividend to be paid at the end of March and September, respectively. This will be calculated as the absolute value amount to be delivered in the six months (£138.8 million based on the current shares in issue), less the cost of any share buy-backs undertaken in the relevant period. Going forward each subsequent relevant period begins on the date of announcement of the dividend for the previous relevant period.'
hxxps://www.berkeleygroup.co.uk/media/pdf/d/q/Berkeley_Interim_Announcement_Dec_2016_-_FINAL.pdf

[dr_smith] 13/7/2017 09:38

IMV, buybacks do not affect a companies profitability, but can mean less spare cash, so less likely to pay larger divs than the norm, so it could be said cap gain likely to increase for investor at expense of Divs.

Taking company view, if they have spare cash do they:
1. Put it in bank for FA interest
2. invest in other co's
3. invest in themselves
4. return cash to shareholders

If they need the cash for future projects and/or buy land as opportunity presents itself, option 4 would be counter productive.

Sentiment/sp is a reflection of co profitability/prsopects, so by maximising profitability/efficiency of use of spare cash, they are maximising value for shareholders. IMO :-)

[fenners66] 13/7/2017 08:48

The more of these buy backs they do the greater the reduction to the next dividend.
This worries me.
The share price is a function of supply and demand, so once the buybacks cease does the demand falls as well? Then the share price?
Keeping the price up artificially but for how long?

On the plus side with less shares in issue the div p.s. will be higher in the future , but at this rate I may never see those higher dividends as the buybacks continue.

So if I'm not going to get the cash return I was expecting here ( I bought at about £25.50) do I have to sell , wait for the end to buybacks and then re-buy?

[jrphoenixw2] 13/7/2017 08:17

It'd be fascinating to know how they decide what px to buy at; but they're certainly not going to disclose that as it would only weaken what ever power they have.
Volume yesterday [from Google/Finance] was 640k vs a rolling 30-day average of 663k. So FWIW buy-backs were 19.5% of the traded volume.

[r ball] 13/7/2017 07:57

Are the buy backs a set total cost triggered by share price band for that day? I suppose brokers know what they are doing.

[jrphoenixw2] 13/7/2017 07:24

Buy-backs yesterday:-
'Date of transaction: 12 July 2017
Number of Shares purchased: 125,000
Highest price paid per Share: 3274p
Lowest price paid per Share: 3247p
Volume weighted average price paid per Share: 3262.587p
Broker: UBS
The Company intends to hold the purchased Shares in Treasury.
Following the purchase of these Shares, the Company holds 3,308,472 of its Shares in Treasury and has 136,848,711 Shares in issue (excluding Treasury Shares).


Cost = £4.1M

[jrphoenixw2] 12/7/2017 07:20

Buy-backs yesterday:
'Transaction in own shares
Date of transaction: 11 July 2017
Number of Shares purchased: 125,000
Highest price paid per Share: 3291p
Lowest price paid per Share: 3255p
Volume weighted average price paid per Share: 3277.2473p
Broker: UBS
The Company intends to hold the purchased Shares in Treasury.
Following the purchase of these Shares, the Company holds 3,183,472 of its Shares in Treasury and has 136,973,711 Shares in issue (excluding Treasury Shares).'


Cost = £4.1M

[jrphoenixw2] 10/7/2017 11:03

BKG in 98th position in the FTSE-350 per Friday close. But that alone isn't enough to get promoted, close though, and the next cut-off isn't until the end of August.


- We seem to be in the summer doldrums for volume. Glad I don't have plans to trade any size until much later this year, but I've been reading up on 'accumulate/distribute' trade strategies just in case...

[r ball] 10/7/2017 10:43

Liquidity is important. I've got holdings in some that only move on news.

[jrphoenixw2] 10/7/2017 10:41

re: 2994, no probs, glad to know I've not yet entirely lost the plot ;)
re: 2992. Agreed trackers might not make a material difference. But AIUI there are plenty of funds either domestic or international that to the extent they've a mandate to invest in UK stocks, limit themselves to the FTSE-100 only. When you have a look at how the liquidity of the FTSE-100 vs 250 components varies I'm not surprised. Trade in BKG at time of writing (live) is a measly 75.3k or £2.5mm. I wouldn't want to be looking to buy or sell in 'institutional size' into that thin market.

[r ball] 10/7/2017 10:22

Jrp-you're right. Apologies. All the best.

[jrphoenixw2] 10/7/2017 10:19

Can you lay out your calculation, perhaps starting with what BKG announced^ then with the complete set of RNS buy-backs layered on top?
I've taken their announcement and layered on *some* of the subsequent RNSs that = 23% of 100p spent on buy-backs.
[FWIW x-ref the last div P/D 24/Mar/17 was 85.24p, so almost 15% erosion].

[r ball] 10/7/2017 10:10

Irrelevant. Trackers buying and selling tend to have minimal effect.