British property developer Berkeley Group Holdings Ltd (LON: BKG) announced it is holding its annual general meeting today, and stated it remained confident in the London, Birmingham and South East housing market, despite a challenging political and macroeconomic backdrop.
To prepare for the risks associated with the ‘disruptive Brexit’, the Company said it would continue to work with its supply chain, and attempt to accelerate the delivery of materials and components.
Berkeley announced a dividend of 20.08 pence per share, to be paid on 13 September 2019; the remainder of the £139.2 million return for the six months ending 30 September 2019 has been ‘satisfied’ through share buy-backs. The Company added that the six monthly return of £139.7 million will be made by 31 March 2020, and the amount to be paid as dividend will be announced at by the end of February 2020.
Berkeley Group statement
In its release today, a Company spokesperson said,
“In the first four months of this new financial year, market conditions in London and the South East have remained robust and consistent with those reported with the full year results in June. Pricing has remained stable and the Group’s forward sales position remains above £1.8 billion.”
“There is good underlying demand for new homes built to a high quality that are well located and properly priced to meet the local housing need, supported by good availability of mortgages. The wider market remains constrained by high transaction costs and the uncertainty in the macro political and economic environment.”
“Berkeley’s is a long-term business. We are currently working on over 20 of the largest residential development opportunities in London and the South East, which will be delivering homes up to and, in many cases, beyond the end of the next decade. These carry a high level of complexity and risk, requiring extensive capital, patience and expertise to deliver. Berkeley has continued to invest its resources in bringing forward the next generation of these sites into development but, like all responsible businesses at this time, has remained cautious in investing in new opportunities. As a consequence, Berkeley anticipates net cash at the half year to be at a similar level to the full year position of £975 million, subject to the volume of any share buy-backs and investment in new land in the intervening period.”
“With the land in place for the next phase of its business plan and continued robust trading, last year Berkeley announced the extension of its £280 million (£2.22 per share) annual shareholder returns programme to 2025, with a targeted pre-tax return on equity of at least 15% over this period.”
“The long-term nature of the business, with an unrelenting focus on the customer and communities, coupled with the complexity associated with delivering tall buildings, means that Berkeley has always focused on long-term value creation, as opposed to annual profit targets. Over the six years to 30 April 2025, we are targeting the delivery of £3.3 billion of pre-tax profit, with the profit in any one year ranging between £500 million and £700 million, depending upon the timing of delivery.”
Investor notes
The Company’s shares are up 2.22% or 86.00p to 3,959.00p a share 06/09/19 13:09 BST. Peel Hunt analysts reiterated its ‘Add’ stance, while Shore Capital reiterated its ‘Hold’ stance on Berkeley Group stock. The Group’s p/e ratio is 8.05, their dividend yield ratio is modest at 0.69%.
Elsewhere in property development and estate agency news, there have been updates from; Redrow plc (LON: RDW), U+I Group PLC (LON: UAI), Hunters Property PLC (LON: HUNT), GCP Student Living plc (LON: DIGS), Barratt Development Plc (LON: BDEV), Belvoir Group PLC (LON: BLV) and Intu Properties plc (LON: INTU).
