A 9 per cent jump in Berkeley (BKG) shares on the back of strong interim results added £509m to the housebuilder’s market capitalisation, as the pre-tax profit guidance for the five years to May 2021 was increased from £3bn to £3.3bn.
The current financial year which ends in April 2018 will represent a peak for Berkeley, before returning to more normal returns in 2018/19. Current guidance points to £1.5bn of profits in the two years to April 2019, with around 60 per cent of that weighted towards the current financial year.
Sensibly, Berkeley offered a cautious view of the housing market, given current political and economic uncertainties, and while forward sales were strong at £2.45bn, this was down from £2.74bn in April 2017. Furthermore, while reservations on an annualised basis are up 20 per cent from the previous year, they are down 10 per cent from 2015/16.
Of the £16.34 per share to be returned to shareholders by September 2021, £9.34 has already been returned or promised. And for the six months to March 2018, £47.5m of the £139.2m allocated has been spent on share buy-backs. The amount to be returned as a dividend will be announced on 22 February 2018.
Analysts at Peel Hunt are forecasting full-year adjusted pre-tax profits of £830m and EPS of 484.2p (from £812.4m/451.4p in 2017).
| BERKELEY GROUP (BKG) | ||||
| ORD PRICE: | 4,174p | MARKET VALUE: | £ 5.65bn | |
| TOUCH: | 4,171-4,175p | 12-MONTH HIGH: | 4,235p | LOW: 2,724p |
| DIVIDEND YIELD: | see text | PE RATIO: | 7 | |
| NET ASSET VALUE: | 1,779p | NET CASH: | £633m | |
| Half-year to 31 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.41 | 393 | 226 | - |
| 2017 | 1.61 | 533 | 317 | see text |
| % change | +14 | +36 | +40 | - |
| Ex-div: | 01 Mar | |||
| Payment: | 23 Mar |
