Berkeley turns 203m profit in "very acceptable" market

Berkeley Group has announed a pre-tax profit of £202.9m for the year ended 30 April 2005.

Although the figure represents a 11.7% fall on the previous year Berkeley said that the market had been “very acceptable” despite the reduction in demand for homes caused by interest rate increases.

The results follow yesterday’s news that Berkeley had sold Crosby Homes to Lend Lease for £235.7 million and been repaid £15m of working capital provided to Crosby since the 30th April 2005.

Managing director Tony Pidgley said: “The disposal of Crosby after the year-end combined with strong performances throughout the group puts Berkeley in a robust position to maximise returns in the coming period.”

During the financial year Berkeley sold 3,570 units at an average selling price of £282,000 compared with 3,805 units at an average selling price of £283,000 last financial year.

Berkeley said that it had managed to marginally increase its forward sales position from £945.3 million at the same time last year to £948.0 million at 30th April 2005. Although the group admitted sales in 2005 were 6.6% lower than in 2004.

Chairman Roger Lewis said: “The fundamentals for the housing market remain positive with continued forecast economic growth in the UK coupled with historically low interest rates and strong employment.”

Sales prices exceeded Berkeley’s forecast by 3% to 5% and covered build cost increases but the group said operating margins were under pressure due to affordable housing requirements and Section 106 planning gain obligations.

Berkeley said because of the high cost of land it had only bought very selectively. During the year terms were agreed on only 19 sites, which equated to 2,110 plots. Although the group said it had secured planning consents on about 3,000 units at Beaufort Park, Hendon, 800 units at Gillingham Waterside and further consents at Chelsea Bridge Wharf, Imperial Wharf and Bromyard Avenue, Acton.

Berkeley said that it was on course to achieve a £2 share payment to shareholders in 2006 and £12 payment by January 2011. In December 2004 shareholders were returned £5 per share.

Pidgeley said: “Our primary goal is to maximise our returns to shareholders as opposed to mainly concentrating on the profit and loss account and this alignment allows the business to continue maximising short-term opportunities within an unambiguous long-term operating model.”