Berkeley beats expectations, but dividend delayed

24th Jun 2011 07:12

London and south-east house builder Berkeley Group reported forecast-beating figures on Friday, on both the sales and the profit level, but investors will have to wait a little longer before they they can benefit from the resumption of a dividend.Full-year revenue jumped by 20.7% from £615.3m to £742.6m, beating consensus estimates of just under £700m. The group sold 2,544 homes during the year at an average selling price of £271,000, compared with 2,201 units sold at a price of £263,000 the year before.Also contributing to the rise was the £13.8m made from land sales, compared with none the year before, reflecting the disposal of three sites in the second half.The increase in sales helped Berkeley boost pre-tax profit by 23.5% to £136.2m, up from £110.3m the year before. The figure surpassed analysts' expectations of £129.8m. Net operating margin grew from 17.3% to 18.3%. Earnings per share grew by 20.2% from 60p to 72.1p, beating consensus estimates of 70.71p.While the board did not decide pay its first dividend since 2004 (as some brokers expected), it has now proposed a long-term plan to return £1.7bn in cash to shareholders over the next ten years. This equates to £13 per share over the period.The group signaled 30 September 2015 for the next payment and intends to give out £4.34 per share, but said that it could return the cash before that date."The long term plan announced today puts in place an exciting and challenging proposition that builds on the strengths of Berkeley's unique business model to realise significant value in cash for existing shareholders, yet retains sufficient working capital to invest in the continuing business and provides a real incentive for management to maximise its long term value," said chairman tony Pidgley."In the short term, the imbalance of supply and demand in the best locations and London's position as a world city is expected to underpin current market conditions. Over the long term, history shows that residential property, as well as being a home, is likely to be one of the best forms of investment," the firm said.---BC