As housebuilders go, Berkeley Group is better placed than most. That's because it boasts a high exposure to the London property market, where demand has held up better than in other parts of the country. Indeed, these half-year figures reported that sales reservations had grown around 20 per cent on the year, thanks in part to a 30 per cent increase in the number of sites from which houses are being sold.
Demand in London remained strong for the type of high-quality houses that Berkeley specialises in. Accordingly, cash due on forward sales rose by 22 per cent in the period to £648.1m, generating significant earnings visibility. Units sold rose from 914 to 1,249, but average selling prices dropped from £299,000 to £262,000 - although much of this reflected a change in the sales mix, which included a 374-room student scheme in Oxford. Underlying prices of high quality homes remained little changed from the full year, which ended in April. The disposal of commercial property assets comprising four mixed-use sites in London contributed a further £3.1m. Operating margins remained broadly the same as last year at 17.4 per cent.
What's more, Berkeley remains strongly cash generative and, while net cash fell by £64.2m to £253m, this reflected the purchase of 2,500 building plots. While the group's success in acquiring land in areas of appreciating value helped to boost the value of the land bank by 12.9 per cent to £2.3bn. In addition, a further £30m was used to repurchase the company's own shares. And while currently unutilised, the group also has in place a £300m bank facility that runs until November 2013, together with £49m of site specific bank facilities, £31.1m of which has been drawn down.
Numis Securities expects full-year pre-tax profit of £126.4m, giving EPS of 68.5p (from £110.3m and 60p in 2010).
| BERKELEY GROUP HOLDINGS (BKG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 867p | MARKET VALUE: | £1.14bn | |
| TOUCH: | 866-867p | 12-MONTH HIGH: | 905p | LOW: 735p |
| DIVIDEND YIELD: | nil | PE RATIO: | 13 | |
| NET ASSET VALUE: | 666p | NET CASH: | £253m | |
| Half-year to 31 Oct | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 290 | 52.0 | 28.1 | nil |
| 2010 | 336 | 61.6 | 33.5 | nil |
| % change | +16 | +18 | +19 | - |
Ex-div:- Payment:- | ||||
