Berkeley group holdings share price up as profits soar

Berkeley group holdings (LON:BKG) shares rallied on Wednesday morning, after a promising set of results for the financial year.

The property developer reported pre-tax profits of more than £800 million, having sold almost 4,000 homes during the course of the year.

According to the company’s latest reporting, profit before tax came in at £812.4 million for the 12 months to 30 April 2017, an increase of 53 per cent from £530.9 million a year previously.

This boost in profitability was attributed to robust sales of a total of 3,905 homes averaging at £675,000, compared with 3,776 homes at a price of £515,000 the year before.

Commenting on the results, chief executive Rob Perrins noted that the housing market in London and the South-East had showed signs of recovery during the second half of the year after “disruption either side of the EU referendum”.

Consequently, the group remained confident of generating pre-tax profits of at least £3 billion over the course of five years from 2017-2021.

Nevertheless, with regards to future outlook, Mr Perrins remained cautious with regards to continued Brexit-related uncertainty and high stamp-duty continuing to act as a deterrent for buyers, with the UK “housing challenge” persisting.

“The combination of Brexit, economic and political instability, increasing planning requirements and the recent increases in property taxation serves to increase the risk profile for developers and this needs to be recognised if the housing challenge in London and the South East is to be addressed” Mr Perrins stated.

He added: “We need conditions for growth that reduce barriers to entry and encourage accelerated development from existing market participants to support increased delivery across all tenures.”

Berkeley will pay a total dividend of 185 pence for the year, down from 190 pence the previous year.

The Berkeley Group Holdings plc is a UK-based property developer with head offices located in Cobham, Surrey. The company is London listed and is a constituent of the FTSE 250 Index.

In light of the promising set of results, shares in the Berkeley Group ticked up 2.01 percent as of 10.58AM (GMT) on Wednesday morning.