Berkeley's building boom

Strong demand for houses and apartments in and around London pushed sales up from 1,927 to 2,294, and Berkeley replenished its land bank by spending £278m on six new sites totalling 1,754 plots. That's why the target of growing estimated gross margin in its land holdings to over £3bn has been reached 18 months early. Moreover, a further five sites have been secured on a conditional basis that will add another 5,000 plots to the land bank when planning consent is granted. Sales made using Help to Buy were relatively modest and are expected to be used in less than 5 per cent of all transactions. However, on lower priced sites, mainly outside London, the government scheme accounted for nearly a third of sales.

Average selling prices rose 4.5 per cent to £350,000, and residential revenue rose from £657.8m to £815.3m. This included the disposal of 534 properties from Berkeley's rental fund to M&G Investments for a net £75.2m. The fund was set up in 2010 to build and run a portfolio of private rental properties that would be attractive to institutional investors. Gross margins were steady at 29.3 per cent, although operating margins eased to 20.7 per cent, reflecting an increase in overheads to £70.7m. This was mainly a result of upward pressure on build costs, notably materials and the availability of skilled labour.

Prior to these figures, JP Morgan Cazenove forecast full-year pre-tax profit of £359m and EPS of 201.8p (from £271m and 160p in 2013).