Berkeley share price jumps on strong set of H1 results

on Dec 6, 2013
Updated: Oct 21, 2019
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iNVEZZ.com, Friday, December 6: Shares in Berkeley Group Holdings (LON:BKG) have risen almost 10 percent within the first hour of trading this morning, after the British real estate developer reported strong first-half performance, underpinned by robust homebuilding activity and higher UK property prices.

Berkeley said in a statement today that its pre-tax profit for the six months to the end of October had risen 19.2 percent to £169.5 million, on a 19.7-percent increase in revenue to £821 million. The upmarket property group sold 2,294 homes during the six-month period, up from 1,927 last year, while its average selling price increased to £350,000 from £335,000. The company added that it had delivered “more new homes than immediately prior to the financial crisis in 2008 and is building on every one of its sites which have viable planning consent”.

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According to the statement, Berkeley’s Tower development in Vauxhall is currently ahead of its original schedule and is on track to deliver the majority of completions in the second half of the current financial year. Assuming this project can be delivered to this timetable, the board has indicated that earnings are likely to increase towards the top of the range of analysts’ current expectations.

The group posted an interim dividend of 90 pence per share. Berkeley, which announced plans in 2011 to
return £1.7 billion in cash to shareholders, said that it was on course to meet its first milestone payment of £568 million by September 2015.
**Tax debate spurs uncertainty**
Berkeley, focused on London and the south of England, has gained from Britain’s booming residential property market. According to a survey by Markit published this week, homebuilding in the country expanded at the fastest pace in a decade in November, with housing starts now 60 percent higher than a year ago. In addition, UK property prices rose in all regions for the first time in more than six years in November, Hometrack figures have shown.

Announcing the group’s robust half-year results today, Berkeley Chairman Tony Pidgley warned however that he was concerned about the impact of George Osborne’s latest move. Yesterday, the Chancellor revealed plans to impose capital-gains tax on home sales by non-residents starting in April 2015 as the government seeks to raise revenue and avert unsustainable increases in London property prices.

“Berkeley has the capacity to invest further, which would create more homes and jobs, but is concerned by the increased uncertainty created by the ongoing debates surrounding the future of property taxation and international buyers,” Pidgley said. “The long-term challenge for the country is to deal with the significant housing shortfall which continues to grow,” he added.

**H1 report boost Berkeley share price**
Investors welcomed Berkeley’s H1 report today, sending its share price over nine percent higher in early morning trading. According to AnalystRatingsNetwork data, 12 research analysts have a ‘hold’ rating for the stock and five have a ‘buy’ rating. The stock’s average rating is ‘hold’ with a consensus price target of 2,237.35p.
**As of 09:12 UTC, buy Berkeley shares at 2,490.00p**
**As of 09:12 UTC, buy Berkeley shares at 2485.00p.**

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