Interim Results 2010/11
Announcing the results of The Berkeley Group Holdings plc (“Berkeley” or “the Group”) – the urban regenerator and residential property developer – for the six months ended 31 October 2010, Chairman, Tony Pidgley said:
“This strong set of results represents an excellent performance from Berkeley at a time when the economy is looking to find traction for what is proving an elusive sustained recovery. When coupled with Berkeley’s strong balance sheet, its unrivalled land bank and the underlying demand for the well located, quality homes developed by Berkeley in London and the South East, the Group remains well positioned to deliver enhanced shareholder value. As always, it is only through the hard work and dedication of Berkeley’s people that results such as these are possible.”
HIGHLIGHTS OF THE PERIOD
|· Earnings per Share
||Up 19.2% to 33.5 pence (2009: 28.1 pence)
|· Profit before Tax
||Up 18.5% to £61.6 million (2009: £52.0 million)
|· Operating Margin
||17.4% (2009: 17.4%)
|· Net Asset Value per Share
||Up 4.9% to 667.6 pence (April 2010: 636.7 pence) following acquisition of 3.8 million shares for £30.0 million
|· Net Cash
||£252.7 million (April 2010: £316.9 million)
|· Cash due on Forward Sales
||Up 21.9% to £790.1 million (April 2010: £648.1 million)
|· Land Bank
||2,512 plots acquired and £263 million of future gross margin added in the period; an increase in value of 12.9% since 30 April 2010
Commenting on the results, Managing Director, Rob Perrins, said:
“Today’s results, which show an increase in both earnings and sales reservations approaching 20%, demonstrate the underlying resilience of the housing market in London and the South East over the last six months. As a consequence, cash due on forward sales has increased by 21.9% over the period, providing forward visibility in a period which has seen Berkeley increase the number of sites from which it is selling.
Since the start of the year, Berkeley has acquired some 2,500 plots, including prime London sites in Westminster and on Hammersmith Embankment, both completing in the second half, and a site for 1,000 new homes in Horsham. Berkeley’s strategy is based on identifying opportunities to acquire land in the right locations to which we can add value and these results highlight growth of 12.9% in the value of land bank future gross margin, from £2,038 million to £2,301 million, in the six months.
Overall, this strong performance provides the Board with confidence that Berkeley can outperform management’s original expectations for the current year and is well placed for the following year.
Finally, I am delighted that Berkeley’s Vision 2020 strategy, launched in June, has so quickly become part of the Group’s culture and continues to place Berkeley at the forefront of the industry. For the fourth consecutive year Berkeley has ranked first in the NextGeneration Sustainability benchmark. In addition, St Edward’s development at Stanmore has received a coveted Building for Life award. It is only by putting the customer and the communities we create at the heart of every decision that the challenges faced by the industry can be addressed.”
Berkeley is pleased to announce a pre-tax profit of £61.6 million for the six months ended 31 October 2010. This is an increase of 18.5% on the £52.0 million achieved in the same period last year, driven principally by an increase in revenue of 15.9% from £290.1 million to £336.2 million. Operating margin of 17.4% is at a similar level to the first half of last year, with net finance income of £1.8 million (2009: £3.0 million) and joint ventures contributing £1.2 million of profit (2009: £1.6 million loss). Basic earnings per share for the six months are 33.5 pence compared to 28.1 pence for the equivalent period last year; an increase of 19.2%.
The housing market in London and the South East is characterised by an imbalance of demand for new homes in excess of supply. The sites recently acquired by Berkeley are in excellent locations where this imbalance has traditionally been most acute. For the time being therefore, and in the absence of any external shocks to the economy, Berkeley believes the current market in terms of prices and transaction levels should remain stable.
Longer term, Berkeley’s outlook remains closely aligned to the success of London in attracting investment, employment and of course, retaining its status as the premier World City. Outside London, which is more closely aligned with the UK domestic economy, the lack of liquidity and the absence of the feel-good factor remain constraints to an increase in transaction volumes on each site.
With these challenging market conditions presenting opportunities for those with access to capital, Berkeley will enter 2011 in a strong position and with an increased level of confidence to deliver the new homes and places in which our customers aspire to live.