Berkeley Group’s Annual Profit Jumps 33% as Investment Strategy Pays Off

on Jun 19, 2013
Updated: Feb 27, 2024
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The Berkeley share price rose by its most in six months today, June 19, as the UK-based property developer unveiled improved annual results. After hitting a peak of 2,256.00p, the stock stood at 2,205.62p at 12:39 GMT, almost three percent above its previous day’s closing level. In the past year, the Berkeley share price has gained more than 70 percent, reflecting the robust performance of the FTSE 250 homebuilder over the period.

***“Strategy Aligned With a Cyclical Market” Spurs Net Income Hike***
The Berkeley Group (LON:BKG) today reported “a strong set of results which underline the benefit of a strategy aligned with a cyclical market”, as the company’s statement read. The homebuilder’s after-tax profit surged 32.6 percent in the year ended 30 April, 2013, as investments made in land purchases and construction, totalling over £3 billion since early 2009, started to pay off.

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Berkeley’s net income jumped to £209.7 million in the 12 months to April from £158.1 million in the previous financial year. The property developer, which operates primarily in London and southeast England, further revealed a 26 percent jump in annual pre-tax profit to £270.8 million. Group revenue rose to £1.37 billion during the year from £1.04 billion previously. The property developer also said today that the value of its land bank rose 10.5 percent to £2.85 billion after it invested £315 million in new land during the year.

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Berkeley’s strategy of buying land cheaply during the downturn and building in the more affluent areas of London and southeast England have helped the builder stay profitable through the economic gloom. Reportedly, Berkeley had sold 3,712 new homes during the financial year, up from 3,565 a year earlier. The average selling price increased 26 percent to £354,000, the company further outlined today.

***On Track to Meet Objectives***
The recent acceleration of site purchases would help Berkeley achieve its target of increasing its land bank by 10 percent in fiscal 2013, the company said in a March 18 statement. In Berkeley’s latest annual report, Chairman Tony Pidgley pledged that the group is also on track to pay out £1.7 billion to shareholders in three instalments by 2021.

“I am confident that Berkeley can meet its objectives for delivering returns to shareholders, but mindful of the risks that geopolitical events, regulation, increases in taxation alongside an uncertain future tax policy and even anti-competitive rhetoric can have on the business and the wider housing market,” Pidgley said today on a cautious note.
Berkeley’s board declared a further interim dividend of 59p per share payable in September. The UK property developer also announced today that Adrian Li, deputy chief executive of the Bank of East Asia, would become a non-executive director at the group’s annual meeting on September 2.
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