Berkeley Group shares up as annual profit edges past guidance
Berkeley Group Holdings PLC on Wednesday praised the UK government’s work in restoring the ‘fundamentals of housing policy’, but urged further reform as it posted a slight profit beat in its annual results.
The Surrey, England-based housebuilder reported pretax profit of £451.4 million in the financial year that ended April 30, down 15% from £528.9 million a year prior. In March, the company had reaffirmed its full-year target of £450 million in pretax profit.
Driving the softer earnings was a 4.2% top-line contraction, as revenue fell to £2.38 billion from £2.49 billion.
The company noted this included £2.27 billion of residential revenue, down from £2.43 billion, as well as £110.4 million of commercial revenue, up from £14.8 million. The company also reported £7.7 million of land sales, down from £39.5 million.
Berkeley Group said it completed 4,076 new homes across London and the South East during the financial year, up 0.7% from 4,047. The company noted this was at an average selling price of £546,000, down 7.9% from £593,000.
The company reported £233.0 million in shareholders returns for the financial year, down 39% from £381.5 million a year prior. All of this £233 million was returned via buybacks, while the prior year £129.7 million was via buybacks, £183.8 million was through special dividends and £68.0 million was through dividends paid.
The company reported a closing net asset value per share of £39.17 at April 30, up 9.0% from £35.95 a year earlier.
Berkeley Group said it determined to play a ‘full part’ in the UK government’s housing and growth mission, but noted that given the ‘deteriorating’ macroeconomic backdrop, ‘there is now a clear case for further government action beyond the initiatives announced to date.’
Executive Chair Rob Perrins said the government ‘has done an excellent job in restoring the fundamentals of housing policy,’ but that ‘the system needs to work to reduce the time taken to get buildings into development and allow homebuilders to make a return commensurate with the risk that can attract the necessary investment capital.’
Perrins said that stamp duty land tax ‘should be reduced on all new homes to a maximum of 3% [zero for first-time-buyers] and the SDLT surcharges that deter the vital investment in new build homes so damagingly should be removed.’
Shares in Berkeley Group were trading 5.3% higher at 3,628.00 pence on Wednesday morning in London.
Commenting on the year’s trading, Perrins said: ‘This robust performance, which is in line with guidance, reflects the focused execution of our Berkeley 2035 strategy, disciplined cost control and our agile response to extremely challenging macro-economic and regulatory conditions.
‘We delivered 4,203 good green homes within the most under-supplied regions of the UK, with 90% built on underused brownfield land within designated regeneration areas. Our projects contributed £530 million in subsidies to deliver affordable housing and commitments to wider infrastructure and community benefits this year. Few business models deliver this level of public good’
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