Berkeley produces a solid FY profit of £110 million as South East housing market stabilises

Berkeley produces a solid FY profit of 110 million as South East housing market stabilises

Berkeley Group reported today that it's sales in the year ended April 30 2010, were down by 87 million to 615.3 million and that as a result it's pre-tax profits have fallen from 120.4 million last year to 110.3 million.

The housebuilder principally operates in London and the South East, where the housing market has stabilised. Demand from equity rich investors and those from overseas who are aided by the weakness of sterling has been strong, particularly for Berkeley's Central London schemes. This has resulted in customers acquiring properties as an investment continuing to account for over 50% of underlying sales reservations.

During the year, the Group sold 2,201 residential units at an average selling price of 263,000. This compares with 1,501 units at an average selling price of 395,000 last year. Berkeley's average selling price always fluctuates due to sales mix. 263,000 is towards the lower end of the range, reflecting a higher proportion of lower value units this time. By contrast, sales in 2008/09 included a relatively high proportion of revenue from the Group's Central London sites.

At 19.6 million (2008-9: 30.5 million), the Group's revenue from commercial activities represents the disposal of commercial units on 19 mixed-use sites, 16 of which were in London.

Like other housebuilders, Berkeley had to refinance during the year, with a share placing and a new 300 million banking facility with Lloyds and Barclays.

It has added to it's land bank having agreed to acquire some 2,200 plots across 20 sites, all in excellent locations in London and the South East where underlying demand is strong, including Belgravia, Battersea, Putney, Ascot and Wimbledon. In addition to the 28,099 plots in its land bank, Berkeley has in excess of 10,000 plots in its long-term pipeline which includes the latter phases of Kidbrooke and Woodberry Down, strategic land and a number of sites being worked up within St Edward Homes, Berkeley's joint venture with Prudential.

Chairman, Tony Pidgley said:

"2009/10 has been a year of change in a number ways. The housing market in London and the South East has stabilised, albeit at transaction levels lower than we had become used to prior to the turbulent market of the previous two years. The land market has begun to yield some attractive opportunities again and, over the course of the year, a growing sense developed that the worst is over with a return to GDP growth."

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