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Berkeley Group Holdings PLC on Friday backed annual guidance and said high sales pricing is absorbing rising construction costs.
The Cobham, Surrey-based property developer said trading has continued ‘robustly’ in the period to February 28 from November 1.
Berkeley stated that the value of underlying sales reservations remains ‘slightly’ ahead of pre-pandemic levels.
Cancellations are also at normal rates and sales pricing is ‘sufficiently’ ahead of its business plan to absorb construction cost increases, it continued.
As a result, the company continues to be on track to meet its earnings guidance and deliver pretax profit growth of around 5% per year for the next three financial years. Further, this would see Berkeley on the path to achieving a pretax profit of £625 million for the year ending April 30, 2025. In financial 2021, the company reported a pretax profit of £518.1 million.
The company anticipates forward sales - cash due under exchanged private sales - to be above £1.70 billion at year-end, essentially flat on forward sales at the end of its half-year to October 31.
Net cash, on the other hand, is forecast to be around £900 million, up 6.4% compared to £846 million at the end of its half-year.
Since the end of its half-year, Berkley also refinanced its bank facilities, which stood at £750 million and were due to expire in November 2023. Its new facilities are for £800 million and will expire in February 2027, with two one-year extension options.
This provides the company with total gross debt facilities of £1.2 billion, it stated, including the 10-year green bonds it issued in August 2021.
On December 8, Berkeley said it has a long-term plan in place to return £282 million per year to shareholders through to September 2025 through dividend or share buybacks. It also has identified £455 million of surplus capital to be returned by the end of April 2023 through either extra cash returns to shareholders or incremental land investment.
Berkeley said that its next scheduled shareholder return is for the six months to September 30 and in the value of £141 million. It already spent £35 million of the amount on share buybacks.
The company anticipates that the second half of its surplus capital return for a further £226 million will be allocated to expenditure on incremental land interests. It is due by April 30.
Berkeley noted a ‘volatile’ operating environment, with continuing inflationary pressure and supply chain constraints.
The company also mentioned ‘uncertainty associated with the combined efforts of the industry and government to address concerns around the safety of people living in tall buildings’ and the developing implications of the conflict in Ukraine.
Looking ahead, Berkeley said it will continue to focus on its investment programme to bring its portfolio of long-term brownfield sites into production, underpinning future delivery and earnings.
Berkeley shares were up 1.2% at 3,807.00 pence each on Friday morning in London.
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