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Berkeley Group profits rocket 40%

Berkeley Group has reported a 40 per cent rise in profits as revenue increased 70 per cent in the first six months of the financial year.

The housebuilder posted pre-tax profits of £142.2 million on £686m of revenue for the six months to 31 October 2012.

Berkeley’s operating margin is now at 19.6 per cent.

The firm said it remained on track to return £568m in cash to shareholders by no later than the first milestone date of 30 September 2015.

The company is planning to return £1.7bn overall by 2021. It will pay an interim dividend of 15p per share (2011: 0p) payable in April 2013.

Chairman Tony Pidgley said the results “demonstrate the value created by acquiring land at the right point in the economic cycle”.

Berkeley said its revenue was predominantly from the sale of residential homes across mixed-use developments in London and the South-east, including £657.8m of residential revenue (2011: £392.4m), £5.2m from land sales (2011: £2.1m) and £23m of commercial revenue (2011: £10.4m).

London’s reputation has “only been enhanced during the period, above all from the successful staging of the Olympic and Paralympic games, and it has remained a stable and attractive market for investment”, it said.

Its land bank comprises 26,370 plots (April 2012: 26,021 plots) after it invested £202m, acquiring a further 1,965 residential plots.

It sold 1,927 new homes in the period (2011: 1,506) at an average selling price of £335,000 (2011: £254,000), mainly across Berkeley’s portfolio of London regeneration, riverside and student schemes and a range of housing schemes outside London. Persimmon’s ASP by comparison is £172k.

Berkeley said its increase in average selling prices, and in revenue generally, was “due to changes in the mix of properties completing in the period, which favoured an increasing proportion of homes in London and included the completion of 149 apartments at Grosvenor Waterside in Westminster”.

The delivery of current schemes continues to be focused on Berkeley’s seven major London projects, which will be phased over several years.

The most significant transaction was for the 15-acre former News International site, or ‘Fortress Wapping’, for £150m, payable in instalments.

Managing director Rob Perrins said the group would continue to invest in new land selectively, but “balance this investment with the need to make a fair return for shareholders that reflects the risk associated with each residential development”.

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