Friday, 5 December 2014

Berkeley Group - Interim Results

Berkeley is a fairly recent addition to my portfolio - here’s a link to the opening post.

They have today issued results for the half year to end October 2014 (link via Investegate). Berkeley has built and sold 1,372 new homes in the past 6 months. This was around 900 less than the same period in 2013 however the average price was 85% higher - £649,000 compared to £350,000 in 2013. This has resulted in revenues up 24% at £1.022m. Pre tax profits are up by a stonking 79.9% at £304.9m (2013 £169.5m) and underlying earnings per share are up 28.9% at 128.9p (2013 100p).

The board have declared an interim dividend of 90p payable in January 2015 (xd 19th December). The Group are on target to deliver a further 90p dividend in September. The longer term plan is to return a total of £8.66 in dividends over the following 6 years to 2021.

During the period, the Group sold a portfolio of approximately 10,000 ground rents for £99.8m and a gross profit of £85m.

Berkeley remains ungeared with net cash rising from £129.2m to £148.4m.

Commenting on the interim results, Chairman Tony Pidgley CBE said: "I am pleased to report a further period of strong performance which underlines the benefit of having the right strategy to operate in a cyclical market…In terms of Berkeley's wider contribution to the economy, we have created over 1,000 new jobs in the last six months, now directly sustaining some 12,000 in London and the South of England, and we are providing structured training to over 700 young adults. We have built some 10% of all new housing and 10% of all affordable housing in London over the last five years. All of this demonstrates the significant contribution that a vibrant house-building industry can provide to the UK economy".

Commenting on the results, Managing Director Rob Perrins said: "The first six months of this year have seen a return to normal trading conditions from a high point in 2013, which has continued to provide a stable operating environment for the business. The demand for new homes, against the backdrop of a shortfall of new housing under construction, continues to underpin the market. In this context, the Board expects full year earnings to be in line with current market expectations, ahead of previous guidance, and for the following two years to remain in line with previous guidance".

There can be no doubt these are excellent figures. The results were well received by the market and the share price was up over 3% to close at £25.97. The yield is 6.9%.

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