Good morning, ladies and gentlemen, and welcome to Berkeley's results presentation for the year ended 30th of April, 2024. I am Rob Perrins, Chief Executive of The Berkeley Group. These results are in line with expectations and have been achieved in the most challenging conditions. We have geopolitical uncertainty, we have domestic political uncertainty, we have high interest rates following a super inflationary period. We have increasingly isolationist policies. We have low economic growth. No one understands the planning system. We've had major regulatory change, with huge uncertainty around the new gateway system. We have a collapse in new home building, with our forecast of starts in 2026 being just over 100,000 homes, unless we have a focused policy intervention to increase supply. So what has Berkeley done in the year? We have run the business very efficiently, reducing operating costs by 8%.
We have maintained our operating margin at the top end of the 17.5%-19.5% long-term range. We have not invested in new sites, but are ready and able to do so once the conditions for growth return. We're on target to achieve our shareholder returns for the year ending 30th September 2024 of GBP 283 million. We have focused on protecting the long-term value in our land holdings, securing five new planning consents and over 30 revisions to our existing consents, many of which address the new regulations in respect to the staircases in tall buildings. We've maintained our financial strength, matching supply to demand. We've continued to deliver on our purpose through our Vision 2030 objectives, achieving market-leading outcomes in customer care, nature, and skills and training.
We are also delighted to be on CDP's A List for climate transparency and performance. Where are we today? Sales volumes are stable, but a third lower than full year 2023. We support the initiatives being discussed to allow customers to access higher loan-to-value mortgages. We believe all surcharges on stamp duty should be removed, as these ultimately inhibit supply. Sales prices remain firm. Build costs are also stable, and there is good availability of labor. Planning continues to be a huge challenge, as we have recently seen at Brighton. The planning system is failing to deliver implementable consents and will continue to do so unless there is a pragmatic approach by the authorities, with a focus on key priorities only, such as affordable housing and local amenities, instead of the Community Infrastructure Levy.
We have all kinds of tariffs that continue to increase, which are undeliverable in the current economic climate. We are working closely with the new Building Safety Regulator in respect of Gateway 2 and Gateway 3 to minimize delays to production. Our focus is on optimizing our sites and maintaining the operating margin between 17.5% and 19.5%. Return on capital employed will drop in this environment due to the speed we are able to bring sites through the planning system and the current rate of sales. We will continue to match supply to demand. We are setting up our own rental platform to accelerate delivery and maximize value from our regeneration sites. We have initially identified 4,000 homes for the platform across 17 of our sites, to be delivered over the next 10 years.
This will be financed from the free cash flow generated from the business, debt secured against the properties once income generating, and third-party capital at the appropriate time. This will not inhibit Berkeley acquiring new sites and maintaining our previously announced annual shareholder returns program. Finishing with guidance. We are targeting pre-tax profit of GBP 975 million for the next two years. This is GBP 525 million for the full year 2025, an increase of 5% on the previous guidance, and GBP 450 million for the full year 2026, which is unchanged. With regard to shareholder returns, we today announced the dividends to complete the GBP 283 million return for the twelve months ending 30th September 2024, with the existing program committed till September 2025.
We will maintain operating margin in the historic range of 17.5%-19.5% for the two-year guidance periods, and we will hold overheads at a stable level. We are targeting gross profit of above GBP 6 billion in the land holdings by the end of 2026. The new rental platform will complete its first homes in the full year 2027. We will maintain our financial strength, which includes holding net cash around the GBP 400 million level for the next two years. This will ensure we are well placed to operate in whatever conditions present themselves at that time. It is difficult to provide any further guidance at this stage until the general election is behind us, and we see the trading environment that emerges. Thank you very much.
I will now hand over to Richard to provide more details on the numbers.
Thank you, Rob, and good morning, everyone. I will take you through the results today, beginning with a summary, then touching on the drivers of revenue and profitability, before looking in more detail at the income statement, cash flow, and balance sheet, finishing with the land holdings. Beginning with a summary of performance for the year, we have delivered GBP 557 million of pre-tax profit, in line with our guidance at the start of the year. Earnings per share decreased by 12% to GBP 3.739 , reflecting higher corporation tax on lower profit, partially offset by share buybacks undertaken in the year. The operating margin at 19.5% is consistent with the first half, and pre-tax return on equity was 16.2%.
Looking at the financial position of the group, shareholders' funds are GBP 3.6 billion, an increase of GBP 228 million, with profit after tax of GBP 398 million exceeding the shareholder returns in the year of GBP 170 million. Shares in issue, net of Treasury and those held in the EBT, have reduced by 1.5% to 106 million, largely as a result of the acquisition of 1.8 million shares undertaken at an average price of GBP 39.62. As a consequence, net asset value per share has increased by 8.4% to GBP 33.63. Net cash is GBP 532 million, up from GBP 410 million at the same time last year. This slide sets out our two important operational metrics.
First, we have cash due on forward sales covering the next three years of GBP 1.7 billion. This provides strong visibility on near-term earnings and cash flow, with 80% of profit for FY 2025 underpinned. As a reminder, this figure represents the cash still to collect on our exchange to private sales only, is therefore a cash, not a revenue figure. Our customer deposit strategy is to take up to 20% on a staged basis if the customer is purchasing more than 12 months from completion. The forward sales figure does not include reservations, nor does it include affordable housing contracts or commercial properties, and it also excludes joint ventures. Just over 60% of the forward sales relates to FY 2025 and the remainder thereafter.
Secondly, the estimated future gross margin in our land holdings has reduced by GBP 700 million to GBP 6.9 billion, largely due to sales in the year. This slide highlights the key components of revenue and profitability. We sold 3,521 homes at an average selling price of GBP 664,000 in the year. This compares to 4,043 homes at an average selling price of GBP 608,000 last year. As always, 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 average around 4,000 homes in each of the next three years.
Pricing for FY 2025 will be around GBP 600,000, before moderating in the following two years to around GBP 550,000-GBP 575,000. Today, we have increased our pre-tax guidance for FY 2025 by 5% to GBP 525 million. FY 2026 guidance remains unchanged at GBP 450 million, and so collectively, a target of at least GBP 975 million across the next two years. It is clearly difficult to be more specific in these markets, and as we have said many times, we will always prioritize cash flow and quality of profit ahead of annual profit targets. Our St Edward joint venture delivered 406 homes in the year at an average selling price of GBP 788,000.
This compares to 594 homes at an ASP of GBP 885,000 last year. With its central London developments now substantially complete, St Edward will now predominantly be delivering out of London sites, and the JV profit will be significantly more modest going forward. Turning now to the income statement and comparing this to the previous year, revenue has decreased by 3% to GBP 2.46 billion, with lower volumes being partially offset by higher average selling prices, as just set out. Gross profit is GBP 645 million, representing a gross margin of 26.2%. Overheads have decreased by GBP 14 million to GBP 165 million. This has enabled the operating margin to remain the same as the first half at 19.5%, notwithstanding the reduction in revenue and gross margin.
This is at the top end of the long-term historical range of 17.5%-19.5%, a strong performance in the current environment. We anticipate margins to remain around this level over the next two years. Our net finance income is GBP 12 million, compared to a net finance cost of GBP 11 million in the prior year. With our high cash balances and fixed coupon on the green bond, this reflects average interest rates in the year at around 5%, significantly higher than last year. Our share of joint venture profits was GBP 66 million, and this will reduce in future years, as just explained. The effective tax rate for the year was 28.7%, up 6% from last year.
This now fully reflects both the new corporation tax rate of 25% and the 4% Residential Property Developer Tax already introduced during the prior year. This slide sets out the cash flows for the year, which show an increase in net cash of GBP 122 million to GBP 532 million. GBP 557 million has been generated from pre-tax profits, with a GBP 106 million net increase in working capital. I will run through the key movements within working capital shortly. During the year, we paid GBP 171 million of tax, and the other significant item is the GBP 117 million of shareholder returns, which comprises dividends of GBP 98 million and GBP 72 million of share buybacks.
As noted at the half year, we're looking to retain net cash above GBP 400 million over the next two years. This slide sets out the abridged balance sheet. I will not go through each line, as I will run through the two key numbers, inventories and creditors, in the next two slides. This slide analyzes the GBP 80 million net decrease in inventories in more detail. The overall land cost in the balance sheet has decreased by GBP 201 million, as we have not invested in new land in the year. We have, however, moved three sites into production during the year, being Bow Green, Winterbrook Meadows in Wallingford, and Broadway East in Bethnal Green.
Build work in progress has increased by GBP 112 million, as we continued steady investment in our existing regeneration sites to meet our forward sales, with a slight reduction in the second half, which I anticipate will continue next year. As anticipated, completed stock has increased and is now GBP 210 million. This is spread across a number of sites and provides immediately available product for those in the zone to move and for when the market inflects. Creditors have decreased by GBP 92 million in the year, and this slide sets out the key movements. The GBP 74 million decrease in trade creditors and accruals reflects normal movements in business activity and phasing. Provisions of GBP 210 million are only slightly up on last year and represent post-completion development obligations, including those related to building fire safety.
There has been a decrease of GBP 14 million in customer deposits, reflecting underlying movements in private deposits in line with the forward sales reduction, offset by increases in deposits from housing associations and institutional transactions. GBP 90 million of land creditors were settled in the year, and this slide also sets out the future payment profile of the remaining GBP 882 million of land creditors. As previously noted, there are some GBP 200 million being repaid in each of FY 2025 and FY 2026, with a gentler profile thereafter.
In terms of our financing, the group's traditional borrowing capacity of GBP 1.2 billion is unchanged from last year and comprises GBP 400 million of 2031 dated green bonds with a 2.5% coupon and a GBP 800 million banking facility, consisting of a GBP 260 million drawn green term loan and a GBP 540 million undrawn revolving credit facility. These facilities are in place to February 2029. At the year-end, Berkeley was ungeared on a net basis, with net cash of GBP 532 million, and total available liquidity, therefore, of just over GBP 1.7 billion. In February, Berkeley entered into a borrowing facility with Homes England for the financing of infrastructure costs on three of our London developments. The facility totals GBP 125.6 million and is undrawn at the reporting date.
Finally, this slide summarizes our land holdings. Estimated future gross margin is GBP 6.9 billion across 54,000 future homes on 70 sites, down from GBP 7.6 billion and 58,000 at the 30th of April, 2023. Two sites were added to the land holdings in the year after securing planning consents. 199 homes in Maidenhead and 470 homes at a St Edward joint venture site in Guildford, transferred from the pipeline. We have secured three other significant new consents in the year. 550 homes at Paddington Green Police Station, as reported in December, along with 970 homes in Sutton and 2,150 homes at Syon Lane, Brentford. The latter is a St.
Edward joint venture site, which will remain in the pipeline while we replan the development to reflect building regulation changes since the original submission of the planning application. In addition, we achieved some 30 amendments to planning consents on existing sites. Overall, there was a net reduction in gross margin of GBP 700 million in the year, which is similar to the amount taken to the profit and loss account in the year. As at the half year, optimization achieved has offset the cost of regulatory changes, including the accommodation of second staircases in buildings over 18 m tall. The pipeline now comprises approximately 13,500 plots across 13 sites. Thank you very much. This concludes today's results presentation.