News Column

Berkeley Group Profit Jumps 40% As It Ramps Up Home Completions

June 18, 2014

Anthony Tshibangu

LONDON (Alliance News) - Housebuilding company Berkeley Group Holdings PLC Wednesday reported a 40% increase in profit for its recent full year, boosted by its residential business which completed 30% more homes than at the peak of the market in 2007.

The FTSE 250 company - which is made up of four autonomous companies: St George, St James, Berkeley and St Edward - posted pretax profit of GBP380.0 million for the year ended April 30, up from GBP270.7 million a year earlier, as revenue rose 18% to GBP1.62 billion from GBP1.37 billion.

Earlier this year Berkeley said the UK government's Help to Buy Scheme has increased activity in the property market and in turn helped the acceleration of delivery of new homes across the sector. In response the group said it completed 3,742 new homes in the year, 30% more than at the markets peak in 2007.

The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The scheme has been extended until 2020 from its original 2016 end date. The second phase, which started in the autumn, guarantees a portion of a buyer's mortgage of new and existing homes and hasn't so far been extended beyond its current end date of 2016.

London and South East-focused Berkeley said domestic demand for housing in the capital was strong throughout the year, with most of its revenue coming from the sale of new homes in the region.

It said GBP1.61 billion worth of revenue came from its residential business with GBP15.6 million coming from its commercial arm. The average selling price of Berkeley's properties increased to GBP423,000 from GBP354,000.

Revenue from commercial activities included the sale of retail space across a number of the group's developments, including Marine Wharf in Deptford, Goodmans Fields in Aldgate, Fulham Reach in Hammersmith, and Imperial Wharf in Fulham.

There were no land sales in the year, compared with GBP8.3 million a year earlier.

The group said its share of the profit from joint ventures totalled GBP12.1 million compared with a GBP1.3 million loss in the previous year, which reflects completions at both Stanmore Place and 375 Kensington High Street in the year.

Overall, operating margin increased to 23.1% from 20.4%. Berkeley said this reflects the benefit of operational gearing and the change of mix of residential properties sold, which includes completions at the St George Wharf Tower in the second half of the year, offset by an increase in overheads.

Financially, the firm said it remained ungeared throughout the year, with net cash rising to GBP129.2 million from GBP44.7 million, after paying GBP195.2 million of dividends to shareholders and investing further in new land and construction.

On the back of its performance Berkeley said it will pay a further interim dividend of 90 pence per share compared with an interim dividend of 59 pence per share a year earlier. This will be paid to shareholders in September. At the half year to October 31, 2013 the firm paid an interim dividend of 90 pence up from 15 pence in the previous year.

At the open Wednesday, Berkeley shares were quoted up 1.0% at 2,281.48 pence.

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Source: Alliance News

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