Good morning, ladies and gentlemen, and welcome to Berkeley's results presentation for the six months ended 31st of October, 2022. I am Rob Perrins, Chief Executive of the Berkeley Group. These are a robust set of results from Berkeley. We have delivered GBP 285 million of profit and increased net cash by GBP 74 million to GBP 343 million. I suspect your real interest today is in our trading and outlook. In terms of trading, Berkeley sales for the six months were 2% ahead of last year on a like for like basis. This includes the five weeks since the end of September, in which sales rates have been approximately 25% lower than the previous five months. Sales have continued at these rates during November.
The weakening economic outlook has brought into sharper focus the increasingly challenging operating and regulatory environment. We are positioning the business to reflect this, which we do from a position of strength and experience. For Berkeley, this means we'll focus on generating value from our existing assets, realizing Forward Sales , matching supply to demand with a focus on cash generation and margin protection. We will acquire new sites only very selectively. I'll return to these points later, but will now hand over to Richard Stearn, our chief financial officer, to run through the results.
Thank you, Rob. 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 period. We have delivered GBP 284.8 million of pre-tax profit in the six months. This is broadly similar to the same period last year and slightly ahead of the guidance provided with the September trading update. Earnings per share has decreased by 0.6% to GBP 2.004. Share Buybacks have largely offset the impact of the introduction of the 4% Residential Property Developer Tax.
Pre-tax Return on Equity was 18% compared to 19.1% last time, this remains comfortably ahead of our 15% long-term baseline. Looking at the financial position of the group. At GBP 3.2 billion shareholders funds or net assets is GBP 74 million higher than at the start of the financial year. This is primarily due to profit after tax of GBP 222 million, outweighing the shareholder returns in the period of GBP 134 million. Shares in issue have reduced by 2.4% to 108.6 million, largely as a result of the GBP 2.9 million of Share Buybacks in the period, which were undertaken at an average price of GBP 37.61.
Net Asset Value per share has increased 4.9% to GBP 29.56. Net cash is GBP 343 million, up from GBP 269 million at the 30th of April. I will look at the cash in more detail later in the presentation. This slide sets out the group's key metrics that support its financial strength. We have cash due on Forward Sales covering the next three years of GBP 2.3 billion, up 7% from GBP 2.2 billion at the year-end. This provides a strong visibility on near-term earnings and cash flow. This figure represents the cash still to collect on our exchanged private sales only. It is therefore a cash, not a revenue figure.
It is underpinned by our customer deposit strategy, whereby we take up to 20% on a staged basis if the customer is purchasing more than 12 months from completion. It does not include reservations or affordable housing contracts. Approximately 35% of the Forward Sales relate to the remainder of this financial year. 45% to FY24 and the balance thereafter. This slide also shows the estimated future Gross Margin in our Land Holdings is GBP 8.2 billion. I will talk more on this later. This slide highlights the key components of revenue and profitability. We sold 2,080 homes at an average selling price of GBP 560,000 in the half year. This compares to 1,828 at an average selling price of GBP 647,000 for the first half last year.
As always, the ASP, Average Selling Price, reflects the mix of properties delivered in the period and is on a long term downward trajectory as we deliver homes across a broad cross-section of regeneration sites. In June, I indicated that our ASP for the current financial year will be slightly above GBP 600,000 and volumes around 4,000. This remains my expectation, underpinning our guidance for the full year of GBP 600 million. Looking forward, we are very mindful of the recent elevated volatility and deterioration in the short-term outlook. In this environment, we will look to match supply to market demand on a site-by-site basis, and have adjusted our expectations for the subsequent two years accordingly. Back in June, I indicated that combined volumes across these two years would be just over 9,000 in total.
I now anticipate this to be around 10% lower for the two years. It is clearly difficult to be more specific in these markets, and as we have said many times, we would always prioritize cash flow and quality of profit ahead of annual profit targets. Pricing will be as previously guided, which was to remain above GBP 600,000 for FY23 and FY24, before reducing by around 10% in FY25. These drivers sit behind the updated pre-tax earnings guidance for FY24 and 25 announced this morning, which is that we are on target to deliver at least GBP 1.05 billion for this 2-year period, which will potentially be weighted more towards FY24. Our St Edward joint venture delivered 251 homes in the period at an average selling price of over GBP 1 million.
This compares to 395 joint venture sales at an average price of GBP 558,000 in the comparative period last time, which included St William as a joint venture. Of the 395 sales, 109 relate to St Edward. As previously indicated, we have delivered the penultimate block at Royal Warwick Square in Kensington this period, as well as the first completions at Millbank. Berkeley's share of St Edward profits for this half year was GBP 61.5 million. Consistent with our guidance in June, I anticipate profits of around GBP 150 million in aggregate over this and next year from St Edward, with approximately 2/3 being delivered in this financial year. Royal Warwick Square and Millbank will substantially complete during FY24.
Therefore, from FY25, St Edward will predominantly be delivering out of London sites, and the JV profit will be significantly more modest, reflecting this. Turning now to the income statement. Revenue of GBP 1.2 billion is similar to the prior year, with movements in volumes and Average Selling Price offsetting each other. Gross Margin is now at 27%, slightly above the Land Holdings margin. The increase in operating expenses is a direct result of the consolidation of St William's overheads for the first time. Operating Margin is 19.5%, which is at the top end of the long-term historical range of 17.5%-19.5%. These margins are reasonable proxies for the immediate business plan period. Our net finance costs are GBP 10.6 million, compared to GBP 5 million last year.
This includes GBP 5 million of non-cash imputed interest on land creditors, which will be ongoing at this run rate over the business plan period as the land creditors gradually reduce over time. The effective tax rate for the period has increased to 22.2% and incorporates the 4% RPDT that was introduced on the 1st of April 2022. From FY24, the tax rate will rise to around 29% to take into account the increase to corporation tax rates for all companies. This slide sets out the cash flows for the period, which increased net cash by GBP 74 million to GBP 343 million. GBP 285 million has been generated from pre-tax profits, with net working capital broadly neutral.
Within this, there's been a GBP 164 million increase in investment in inventory, which was largely offset by a related increase in land creditors, which I will run through in more detail shortly. During the period, we paid tax of GBP 67 million. The other significant item is the GBP 134 million of shareholder returns, which comprises the September dividend payment of GBP 23 million and GBP 111 million of Share Buybacks . Looking forward, we are maintaining our target to be broadly Working Capital Neutral over this and FY24. This would see Berkeley have net cash of above GBP 500 million at April 2024. I will not go through each line on the balance sheet as I will run through the key numbers for inventories and creditors over the next two slides.
The other significant movement in the period is the GBP 67 million reduction in the debtors balance, which related to VAT recoverable on the acquisition of the St William sites at the end of last year. This slide analyzes the GBP 164 million increase in inventories in more detail. The overall land cost in the balance sheet has increased by GBP 127 million, driven by an increase in lands not under development. This arose as we legally completed the purchase of 11 of the remaining 12 St William sites during May and June. These were previously subject to conditional contracts. There was no cash impact to this increase as the purchases of these sites was on deferred terms and is therefore matched by an increase in land creditors. There is one remaining St William site, which is due to legally complete in 2025.
Build work in progress increased by GBP 60 million, which reflects a broadly stable underlying position. Completed stock has decreased by GBP 22 million and reflects a level we are very comfortable with, it is spread across a number of sites. Creditors have increased by GBP 86 million in the period. The main driver for this is the GBP 128 million increase in land creditors following the completion of the 11 St William sites as indicated in June. Land creditors now total GBP 929 million. Looking at the aging of these, approximately GBP 50 million is due for payment in the second six months of this financial year. You can see from the graph on the slide that the remainder is spread reasonably evenly over the following nine years.
Deposits on the balance sheet have increased by GBP 8 million to GBP 939 million. This includes an underlying increase to deposits from private customers in line with the increase in Forward Sales . Creditors also include provisions of GBP 175 million, largely representing post-completion development obligations. In terms of our financing, the group's borrowing capacity of GBP 1.2 billion is unchanged and comprises the following: GBP 400 million of 2031 dated Green Bonds with a 2.5% coupon and a GBP 800 million banking facility which is made up of a GBP 260 million drawn Green Term Loan and a GBP 540 million undrawn revolving credit facility. The bank facilities are in place until February 2027, with the option to extend to 2029.
At the half year, Berkeley was ungeared on a net basis with net cash of GBP 343 million and total available liquidity of just over GBP 1.5 billion, taking into account these borrowing facilities. Finally, this slide summarizes our Land Holdings at the 31st of October, 2022. Estimated future Gross Margin is GBP 8.2 billion across 64,000 homes, down from GBP 8.3 billion and 66,000 homes at April. We have not added any new sites to the Land Holdings in the period. The net reduction in Gross Margin of GBP 100 million therefore reflects the combination of gross profit being taken through the income statement of just under GBP 400 million and around GBP 300 million added through optimization and reappraisal. Thank you very much and I will now hand back to Rob.
Thank you, Richard. I would like to set out the strong position Berkeley is in as we navigate this period of uncertainty and how Berkeley's unique and long-term business model is set up for the cyclical market in which we operate. In doing so, I will review our unrivaled Land Holdings before looking in more detail at today's market conditions and operating environment. Following this, I will clearly set out how we are positioning the strategy to protect value and deliver returns in these volatile and uncertain times. Finally, I will conclude with our outlook and guidance. There are five key features of our unique long-term business model, which are set out on this slide. Sustainable brownfield regeneration, a London and South East focus, financial strength, strong Land Holdings , and we are an added value developer.
We are the only house builder focused on brownfield regeneration at scale in full alignment with the government's brownfield first agenda. We have 32 complex challenging projects, 26 of which are in production. Each project is individually designed in partnership with local authorities and communities. Brownfield development provides economic growth and revitalizes our towns and cities to improve lives in a sustainable way that makes the best use of existing resources and infrastructure. It provides positive outcomes for communities and the environment by introducing new amenities and public spaces and through well-designed energy efficient and affordable homes. In the period, we've provided GBP 374 million worth of subsidies to deliver affordable housing and wider infrastructure and community benefits, over 100% of post-tax profits. This is our highest ever investment in socioeconomic benefits in a six-month period.
We operate in two core markets, which are both undersupplied, London and the South East. This slide shows the location of our 32 large-scale regeneration projects. We believe in the eternal appeal of London. It is the world's most fantastic city with deep and proven demand. We deliver more than 10% of the capital's new private and affordable homes each year. We have the capability to invest further if the conditions for growth are in place to support responsible, sustainable investment. Berkeley begins the next period in a position of financial strength. This is defined by net cash of GBP 343 million, our Forward Sales of GBP 2.3 billion, the GBP 8.2 billion of future gross profit in our Land Holdings at a Gross Margin rate of 26.5%.
The next important feature of Berkeley's business model is our Land Holdings , which are set out on this slide. This means that Berkeley is never under pressure to buy land at any point in the cycle. In the last 6 months, we've not added any new sites to the land bank. We have conditionally acquired one site at Watts Park, which has been added to the long-term pipeline. You can see that the 32 regeneration sites have around 46,000 future homes between them and comprise 72% of the group's Land Holdings . Just over 70% of our Land Holdings plots are in London. These Land Holdings will sustain Berkeley's delivery profile for the next 10 years.
Over 80% of our plots have at least an outline planning consent. We will continue to seek to add value and ensure our consents are appropriate in the context of the market conditions and wider operating environment. The maps covering all 84 sites are contained in the appendix. The last element of the business model is Berkeley's added value approach. We adopt a bottom-up approach to maximize the development potential for each site for all stakeholders. This is different to a growth-based, top-down volume approach. For us, value is created through our land and planning strategy, which flexes according to the prevailing operating environment. For shareholders, this model has allowed Berkeley to create value through investing and growing the business or returning surplus cash at different times within the cycle. I would now like to look at the operating environment, beginning with the sales market.
For Berkeley, underlying sales in the six months have been 2% ahead of last year on a like-for-like basis, but we have witnessed a slowdown of around 25% since the end of September. London has been resilient throughout, while the market outside London has slowed at a greater pace. We've continued to sell homes at prices above our business plan levels throughout the period and have not seen any reduction in pricing over the last two months. The proportion of homes sold remains broadly 50/50 between owner/occupiers and investors, with overseas customers accounting for the majority of investors. There is a lack of urgency in the sales market outside London, but with mortgage rates gradually falling, this should bring back some stability and return of confidence to the market.
There is an undersupply and strong rental growth coupled with full employment and strong and supportive banks which will limit distress in the market. This suggests that while transaction levels will be lower for a period, pricing should remain stable. Looking at the supply side, planning continues to be a significant barrier to new entrants and growth. It is taking longer due to local authority resource constraints and the bureaucratic nature of the system. We have been successful on numerous planning provisions on existing sites in the period and obtained one new planning consent at the St William site in Worthing. We are also waiting on a number of appeals and call-ins. We continue to work on adding value to our Land Holdings and pipeline, which increases gross profit but does not enhance the Gross Margin percentage due to the planning tariffs.
There are ongoing changes to the Levelling-up and Regeneration Bill, which will continue to cause huge uncertainty, which delays the process further and will restrict supply until there is greater clarity on how it will operate. In respect of build costs, the rate of increase is beginning to reduce and is likely to fall below 5% in the next year. There are still energy cost increases to feed through, which will, for example, increase the cost of bricks and plasterboard in the new year. This will be offset to some degree by falls in timber and steel prices, and we do not expect to see labor costs rise significantly due to the fall in output to match lower sales rates. Material availability has eased over the period, and we're not experiencing any major issues in getting sufficient material to site.
Overall, taking consideration of the sales, planning, and build points noted above, we believe that we will be able to maintain our Gross Margin percentage in the Land Holdings . Turning to building safety matters, Berkeley is carrying out assessments on all applicable historic buildings. We are also moving forward with our commitments under the Developer Pledge signed in April. We are in discussions with DLUHC in respect to the long-form contract. We've asked for a clear standard, which is risk-based and proportionate, covering life-critical fire safety issues with a proper arbitration system in line with the commitments made in April, in which all parties, including government, are held accountable for their actions. Resolving this in this manner is in the interest of government, banks, developers, and most importantly, leaseholders, as it will give certainty to the process and speed up the completion of necessary works.
We are also in positive and constructive discussions with the new Building Safety Regulator to ensure we meet the requirements moving forward under the Building Safety Act. We have a very clear strategy at Berkeley for today's uncertain times. We will realize our Forward Sales and match supply to demand. We will add value to our existing landholdings and pipeline sites, protecting Operating Margin . We will limit new investment and focus on cash generation. We are focused on being Working Capital Neutral over the remainder of this year and next, and we'll complete the transition from the investment phase to the cash generation phase. This will see net cash build to over GBP 500 million by the end of full year 2025. Cash generation brings Berkeley optionality.
We can either invest in the business when the conditions for growth return, or we can reassess the levels of return to shareholders depending on the prevailing operating environment. I personally do not see another investment phase until at least two years after the next election, when there will be more clarity over the planning and regulatory environment. In addition, in spite of the brownfield first narrative, there are no incentives to invest at present. With increased planning tariffs, coupled with corporation tax increasing from 19% to 25%, plus the 4% RPDT and the prospect of a further levy designed to raise an additional GBP 3 billion from the industry. Lastly, I will conclude with a summary of our guidance. We are on target to deliver approximately GBP 600 million of pre-tax profits for the year ending 13th April 2023.
This is unchanged since the start of the year. We are targeting pre-tax profits of at least GBP 1.05 billion for the following two years as we match delivery to the prevailing market conditions. Beyond the three-year guidance period, we continue to target a sustainable 15% Pre-tax Return on Equity . Ongoing annual shareholder returns of GBP 283 million are forecast to continue to September 2025, which is currently equivalent to GBP 2.60 per share, an increase of 30% since December 2016. Thank you very much for your time today. This concludes the presentation of Berkeley's results for the six months ended 31st of October, 2022.