15th Jun 2016 06:22
LONDON (Alliance News) - Berkeley Group Holdings PLC on Wednesday said both its revenue and pretax profit dipped in its recent financial year, after it sold more homes but at a lower average selling price, due to the higher-end market in the UK being hit by increased transaction taxes and as the country's European Union referendum approaches.
The FTSE 100-listed housebuilder, which almost exclusively focuses on more-expensive developments in London and the South East of England, posted revenue of GBP2.05 billion for the year ended April 30, down from GBP2.12 billion the year earlier, comprising of GBP1.99 billion from operations and GBP53.4 million from the sale of ground rent assets.
Berkeley said this decline came after it sold 3,776 homes during the year at an average selling price of GBP515,000, compared to the 3,355 homes sold at an average selling price of GBP575,000 a year earlier.
"While sales are down 4% for the year as whole, the market for Berkeley has slowed some 20% in the five months to May 2016 as the EU referendum approaches, with no new London launches in this period. This has had a more distinct impact on the higher end of the market which has also been affected by increased transaction taxes and the policy shift against buy-to-let investors," Berkeley said in a statement.
"We continue to achieve sales prices ahead of our business plan with price inflation remaining for properties of less than GBP1.3 million where demand is most robust, with Berkeley already absorbing the increased cost of transaction taxes above this level in its pricing. New sales activity is now focused on the periods beyond 2017/18 with a number of new launches planned for later in the year, once the EU Referendum uncertainty passes," Berkeley added.
As such, Berkeley's pretax profit slipped to GBP530.9 million for the year, down from GBP539.7 million the year earlier, although on an adjusted basis profit rose 5.6% to GBP479.9 million from GBP454.6 million, as the company benefited from a larger share of joint ventures. The adjustments strip out one-off profit from ground rent sales.
Berkeley said it remains on track to deliver pretax profit in the region of GBP2.00 billion over the three-year period ending April 30, 2018, underpinned by its GBP3.25 billion forward sales. The company said it has made "great strides" with its land holding over the year, acquiring 12 new sites, encompassing 8,600 plots, with 9 new planning consents secured and 21 revised planning consents.
Berkeley said it was offering a dividend of 190 pence per share for the recent financial year, compared to the GBP180p per share dividend offered a year earlier.
By Hannah Boland; [email protected]; @Hannaheboland
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