Berkeley Group Holdings plc (LON:BKG) is holding its Annual General Meeting today, at which it will provide the following Trading Update covering the period from 1 May 2023 to 31 August 2023.
“With this trading update, Berkeley re-affirms its earnings guidance to deliver pre-tax profits of at least £1.05 billion across the current and next financial years; likely to be weighted slightly to FY24. Supported by a strong opening forward sales position, we have over 90% of FY24 revenue exchanged and anticipate cash due on forward sales to be around £2 billion at 31 October 2023 (30 April 2023: £2.14 billion). We remain on track to be working capital neutral over the course of this and the next financial year.
Profits for the current year are expected to be split broadly evenly between the first and second half. Net cash at 31 October 2023 will be around £325 million (30 April 2023: £410 million), reflecting the relative phasing of joint venture and Group delivery over the course of the year, with the former concentrated in the first half. The actual net cash position is, as always, subject to a number of variables including the pace of share buy-backs in the intervening period.
In terms of the sales market, enquiries have stayed at similar levels over the last four months, but the value of underlying private sales reservations is some 35% below last year’s rate, reflecting the elevated macro-economic and political volatility. Pricing remains resilient and above our business plan levels, due to the constrained supply of both new-build and second-hand homes to the market, while cancellation rates are stable.
October will see the transfer of responsibility for building control sign-off to the new Building Safety Regulator, with whom we are working closely to minimise any potential disruption from this transition. Build cost inflation is at negligible levels when measured across our portfolio and we are working with our supply chain to ensure delivery programmes are met.
The complexity and protracted nature of the current planning system and lack of clarity surrounding certain regulatory changes affecting our sector, at a time of considerable uncertainty for the UK economy with persistent high inflation and interest rates, continues to deter investment into brownfield regeneration and the wider housebuilding sector. Consequently, Berkeley has not acquired any land in the period and will only invest very selectively in new opportunities. We remain focused on securing and delivering the value inherent in the Group’s existing land holdings and pipeline in a disciplined manner that will support a sustained pre-tax return on equity of 15% through the cycle.
As announced on 10 August 2023, a dividend of £63.1 million (59.30 pence per share), will be paid to shareholders on 8 September 2023 with the remainder of the £141.3 million return for the six months ending 30 September 2023 having already been satisfied through share buy-backs. Berkeley is on track to deliver the next annual shareholder return of £282.7 million (currently £2.66 per share) by 30 September 2024 through a combination of dividends and share buy-backs, with at least £0.66 per share of the annual return made via dividends.”
Berkeley Group builds homes and neighbourhoods across London, Birmingham and the South of England. They specialise in brownfield regeneration, reviving underused land to create unique, sustainable and nature-rich places where communities thrive and people of all ages and backgrounds can enjoy a great quality of life.
