Berkeley Share Discussion Threads

[jonwig] 12/2/2009 16:42

twh - as far as I know, BKG aren't part of the construction group. But you may know more than I - it wouldn't be too difficult!!

[the white house] 12/2/2009 16:29

Hi Guys

Gone long today June 09 @ 888p & savills...Think that what i'm hearing from local agents, from my own street! & interest rate falls that more upside than downside from this point.
Like the Knight Frank write up today that London superprime likely to lead the island out of the wilderness
Awaiting start news on the extraordinary tallest block in Europe in April?...how much for the penthouse!?
selling price from this should be able to fund the £6 divvi in 5 years time promised

TWH

[jonwig] 07/12/2008 09:18

FT:

Berkeley hails cash 'emperor' position

By Kiran Stacey

Published: December 5 2008 17:48 | Last updated: December 5 2008 17:48

Housebuilders might be struggling but Berkeley showed its resilience as the UK's largest homebuilder by market capitalisation as it announced a relatively small 12 per cent fall in pre-tax profits and £138.2m in net cash.

The results for the six months to October 30 show that Berkeley has managed to become the only major UK housebuilder with a net cash position.

Rob Perrins, the company's finance director, said: "It's often said that cash is king but I think right now, cash is emperor."

Revenues for the period rose 2.5 per cent to £452.6m, but that turned into a fall in pre-tax profits to £79.6m as profit margins were squeezed by tough market conditions.

The company said it was confident it could keep margins within a target range 17.5-19.5 per cent even if conditions deteriorated further, as a net cash position would keep financing costs low.

Mr Perrins said one way the company would keep margins high was to refuse to build affordable housing in their developments.

Asked what this would mean for those in need of such housing, he said: "That's the government's problem."

Berkeley will now have to decide what to do with the cash on its balance sheet.

One option is to buy land, but Mr Perrins suggested the company would only do this when prices were low enough.

"Prices haven't yet come down," he said. "But when some of the smaller companies start to go insolvent, we will be able to pick up land from the administrators much more cheaply. That will probably happen in the first or second quarter of next year."

However, Mr Perrins denied the company was likely to use the cash to bid for contracts to build the Olympic Village for London 2012, in spite of John Armitt serving as a Berkeley non-executive director as well as chairman of the Olympic Delivery Authority.

The company has chosen not to pay a dividend this year, in spite of earnings per share of 46.3p, as it looks to protect its cash position.

It says it intends to pay £3 per share not long before 2014.

Berkeley's share price closed up 1.46 per cent at 800p.

[jonwig] 23/10/2008 16:13

fair comment, from a builder staying resolutely ungeared:

The downturn will be long and painful but property is a long-term business and it will recover, according to two of the industry's top names.

Gerald Ronson chief executive of Heron International said: "This is going to be a long, painful and expensive road. There will be a different type of banking in the sense of loan to value covenant and mortgages etcetera."

Speaking with Ronson at the Movers and Shakers event in London this morning,Tony Pidgley , managing director of the Berkeley group said: "Everybody had become a chancer at all levels. The whole of society is over-leveraged, so there's more pain to come."

However both agreed that there would be a recovery. Ronson said: "Property is a long-term business. You have to ride out the cycle and have the staying power to take you through the cycles. As long as you survive it will be okay in the end."

Pidgley said there could be a recovery in two years. He said: "Why does everyone want to grow and grow? Keep it small, keep it controlled and keep the risk out of it."

On the issue of HBOS and the wider problems with the relationship between banking and property, Pidgley said: "Why do bankers think they could run property businesses? Some of the companies they invested in were very good at what they did, but never understood gearing and bonds, for example, that they were forced into by the banks."

The pair also agreed that now could be the time to put pressure on the government over the planning process, which Ronson called "democracy gone mad."Pidgley said: "We're renegotiating every planning permission we've got.

The planners have no concept of the money you put out, they just have a list of what they want. Well, now is the opportunity to say to the government 'you can't have it.'"

[manners2] 23/10/2008 09:38

why is BKG's share price so high!?

[spob] 08/10/2008 00:18

Insight: Pinning down shape of new-look financial world
By Michael Gordon, Fidelity International

FT

Published: October 6 2008 17:05 | Last updated: October 6 2008 17:05

The events of the last few weeks culminating in Monday's dramatic stock market falls have changed the financial world in a way few would have thought possible.

The extent of the changes ahead cannot be underestimated and we should all expect a different world to emerge in the next few months. What was once old may well become new again. Recent events have taught us to expect the unexpected. Here are seven things to look for on the road ahead.

EDITOR'S CHOICE
Full coverage: Global financial crisis - Sep-25Markets routed in global sell-off - Oct-07The Short View: Market crash? - Oct-06Fed takes steps to bolster liquidity - Oct-06EU leaders vow to use any measures necessary - Oct-06EU resists plan for bail-out fund - Oct-061. Expect the financial world to become more local. When fear trumps greed, emotion overrides reason. Home is where the heart is and we should expect investors to feel safer in their own back yard for a while. This is not least because that is where they will feel most confident that their governments will protect both them and their institutions. These institutions and those who trade for them are likely to prefer local counterparties where they are available.

2. The financial industries have become political. In the UK, Gordon Brown has closed some of the gap in the polls, a fact that will not be lost on him, his supporters and other politicians. The public are looking to governments to act and politicians have shown they will not let the electorate down. We should remember that governments are local, not international. Whilst information and intelligence are shared internationally, decisions are made at the country level.

3. Complexity is out and simplicity is in. Investors want to understand fully what they are buying and where their exposures really are. This is a reasonable expectation in normal times, let alone in the uncertain period that lies ahead. Many financial instruments, their underlying exposures and the leverage within them had moved beyond the understanding of those who bought them and beyond those who had the responsibility of governing the institutions which traded and marketed them. Firms will become more focused on what they feel they can do well and what they can adequately control and monitor.

4. Investors will shift away from models, quantitative or otherwise, and back to human beings, where their level of understanding is greater. Again, this lesson could reasonably have been learned in August of last year. It wasn't fully. It has been now. Many such models rely on past relationships between securities, markets and asset classes.

These relationships are breaking down and look different today. Theory and practice can be strange bedfellows as many investors are now finding out. Market participants have learned now how leverage has over-ridden historical correlations, so that everything now seems one-directional.

5. Innovation will be out and experience back in. The "shock of the new" has been painful for many. Funds will flow to those with experience in the traditional practices of traditional markets. This trend was already well underway this year, but recent events have cast it in stone – at least for the foreseeable future. "Smart" will be replaced by "sensible". Thomas Jefferson wrote that – "when a man assumes a public trust, he should consider himself a public property". Trust will need to be earned again.

6. To regain that trust, we will need to recognise that the days of opacity are over. Many investment products of recent years contained hidden features such as leverage as well as security and asset class exposures that did not align with the expectations of those who owned them. Investors will now demand transparency – both from the companies managing their money and in the products that they market. Even if investors do not demand greater visibility, the regulators will do so.

7. Finally, expect oversight to become at least as important as insight. At well managed institutions, the central importance of compliance is already embedded. Companies that had relegated these functions within their firms will need to redress the balance.

While a recovery in markets may be around the corner, the structures and behaviours we have known for the last few years will stay in the rear-view mirror of drivers who will proceed down an old and bumpy road with a caution not seen for quite a while.

The writer is global head of Institutional Investment Fidelity International

[spob] 04/10/2008 02:31

Mission begins to differentiate next winners and losers
By Neil Hume

FT

Published: October 4 2008 03:00 | Last updated: October 4 2008 03:00

The London market set more unwanted records this week. Not only did the FTSE 100 register its worst monthly performance since the stock market crash of 1987, but it also posted a fifth consecutive quarter of losses. (Such a dismal run has only happened twice in the past 40 years - in the early 1970s and 2000-01).

Strange then, to hear the banking sector being touted as a safe place to warehouse cash in the coming months. However, Morgan Stanley has been tentatively pushing this idea to clients in recent days.

Its UK equity strategist, Graham Secker, thinks it is possible that we are exiting the "financial stage" of the current bear market and entering the "economic phase". If so, he says, there is good reason for thinking financial stocks could outperform. "If we really are making such a transition then this is likely to signal a better backdrop for risky assets."

And financials have already started to make ground. Banks were the best performing sector in the UK over the past two weeks and globally in the past month. In contrast, the worst performing areas were mining and construction. The industrial metals and mining sectors have underperformed the wider UK market by 38 and 23 per cent respectively in September, while construction lagged by 12 per cent.

This is not as surprising as it seems. While the financial crisis has been stealing all the headlines, economic data been deteriorating and economists have been lowering forecasts for global growth.

Mr Secker notes that the best performing sectors in first six months of the past two UK recessions have been insurance and banks, while basic resources and oils have been the worst. Banks also tend to perform well in the six months following the first rate cut during recession.

Of course with so much uncertainty in terms of the financial crisis and its impact on the wider economy, Mr Secker concedes one should not draw too many conclusions from the past two recessions.

However, with governments moving to prop up ailing banks and guarantee deposits, the outlook for financials is perhaps brighter than it has been for months, Good enough, for US bank Wells Fargo to launch a surprise counter bid for Wachovia yesterday.

More widely, there are good reasons for thinking that there will be greater differentiation between the winners and losers over the coming 12 months. The current bear market has been notable for indiscriminate selling. Of course some sectors, notably healthcare and food and beverages, have outperformed but almost every area of the market has experienced some pain.

Citigroup says this is a marked contrast to the last downturn in the 1990s, which had many similarities with now - a banking crisis in the US, housing and consumer recessions and broad economic stagnation. Since July, the average gap between intra-sector winners and losers in this cycle is 100 per cent, says Citi's Adrian Cattley. This may sound big, but the gap in the early 1990s was over 300 per cent.

Going forward, Mr Cattley thinks investors will reward companies with strong balance sheets and resilient earnings - such as healthcare, food and drinks groups - and shun highly geared companies, especially those with short-term financing needs. "The two key themes of the next 12 months will be de-leveraging and earnings downgrades. Companies that are able to deliver absolute earnings growth are likely to be rewarded with at least relative outperformance."

Alternatively, investors might consider looking at some of the large multi-national companies that have dividend yields considerably higher than UK gilts and where the dividend is unlikely to be cut. These include BP, HSBC, Vodafone and GlaxoSmithKline. These companies also have strong balance sheets and broad exposure to the global economy. They also make a large chunk of their earnings in the US and should benefit from the strength of the dollar. In fact, this select group could be a better bet than buying into the banking sector, which remains a trade only for the very brave.

[gsands] 26/9/2008 16:49

Heading back towards 600p. When one considers just how dire the market is going to be in 2009, this could realistically fall below the recent lows.

It's going to be a very long bear market in property and by the end no one will be able to imagine the market ever rising again.

When we reach that point, it will be the right time to buy again and this stock will be one of the best to own.

Such a low in the market, using what is going on in America as a judge, may not come for three years or more - i.e. 2011.

[the white house] 21/9/2008 18:42

I recall a statement along the lines of postponing with a view to doubling in 3 years...i.e. £6 in 2014

[jonwig] 18/9/2008 12:16

GS - there's no divi payment here.

Instead there's a scheme of arrangement to return capital to shareholders. The final £3 was due in 2011 (IIRC) but has now been put off so that BKG can use its cash (gear up, even) to buy distressed land.

They have said that divis and/or share buybacks are being considered, but no numbers given.

Housebuilders have been quite firm lately, no doubt because of the likelihood of lower base rates. I doubt you'll see 600p anytime soon.

[gsands] 18/9/2008 08:17

I'm a buyer at 600p should it restest those lows again.

Would some kind soul advise me on what the current divi is please.

[jonwig] 17/9/2008 12:50

Berkeley bucks the trend and stays debt free

By Stanley Pignal

Published: September 17 2008 03:00 | Last updated: September 17 2008 03:00

Berkeley Group Holdings cemented its status as the most resilient of listed housebuilders yesterday as it revealed a debt-free balance sheet in spite of continuing with share buy-backs.

The London-focused developer generated £91m of cash in the four months to the end of August, even as it admitted sales levels had fallen to about half its historical average.

Uniquely for a housebuilder, Berkeley reiterated that both interim figures to October and full-year figures to April were on track to meet board expectations.

Rob Perrins, finance director, credited Berkeley's policy of amassing large forward sales positions and the relative resilience in the capital's property sector for the upbeat statement.

"The depth of demand in London, particularly from overseas investors and buyers, means that it is holding up for now," he said.

Mr Perrins admitted that private house sales had fallen by more than half as potential buyers faced problems finding mortgages and consumer confidence fell.

But cost-cutting moves and cheaper planning consents meant that margins would be "within historic ranges". Other builders have been facing steep declines.

Mr Perrins said Berkeley's strong balance sheet - its net cash position is £71m - would allow it to shop for land opportunities as the market faces a drought of potential buyers and other builders look to raise cash.

The shares fell 17½p to 839p.

* FT Comment

Seasoned investors know better than to expect much in the way of figures from Berkeley Group in interim statements. But the few numbers included show Berkeley to be in better health than the likes of Taylor Wimpey or Barratt Developments. Having cash at hand in the current land market - or in next year's market, once distressed sellers start to appear - could be a remarkable asset and could set the company up for a decade. That is broadly what happened during the last downturn. Berkeley is trading at seven times prospective earnings. With most of its peers forecasting losses next year, comparisons can be tricky. On the plus side, Berkeley's lack of exposure to cities outside London means it is less likely to write down the value of its land. It has net cash and the best management in the sector. On the minus side are corporate governance issues - potential investors need to dissect the management's deal with shareholders, and agree to the extraordinary remuneration agreed in the boom times. Regardless, it remains a housebuilder, a sector to be approached only by the hardiest investors.

[jonwig] 16/9/2008 08:43

A strong trading statement from BKG this morning, with net cash of £71m against debt of £1.5m at H1. It looks as though they will be buying land or their own shares, and a dividend stream is likely as opposed to capital repayment.

Sales are not good, but that's hardly a surprise.

[jonwig] 13/8/2008 12:41

HW - they said as much at the end of June:

...the proposal is to extend the Scheme of Arrangement to allow for an anticipated increase in land investment with the final £3 to be deferred for up to three years (no later than January 2014).

Cash flow is strong and gearing was below 1% at the last accounts, so there is scope to borrow to finance land purchases, something few other listed housebuilders can manage!

We should hear more on 16 Sept with the IMS.

[hamsterwheel] 13/8/2008 12:24

Rumour has it that Berkeley are rather awash with cash and going round buying every bit of land going from distressed sellers.
They must think the bottom has been reached.
Tony Pidgeley is the best land buyer in the country and has been pretty good with his timing historically.

[the white house] 11/8/2008 17:32

oh dear...

its an upgrade and not a sell and GS price has moved 25p and is still £3 behind the times...



Housebuilders boosted by Goldman Sachs review
By Nicholas Paler | 11:09:00 | 11 August 2008

Housebuilders dominated the FTSE 250 leader board mid-morning after an upbeat review from Goldman Sachs which raised price targets for many stocks.

Having upgraded its recommendation on Bellway to 'neutral' from 'sell' in light of its strong balance sheet, as well as increasing its price target to 613p from 465p, the broker also increased its targets on a range of stocks in the sector.

This included an upgrade to Berkeley Group's price from 619p to 644p, as well as Bovis Homes which it raised to 325p from 294p.

[jonwig] 11/8/2008 16:17

Positive report on sector from G-S, though BKG a 'conviction sell':

[zimzoot] 11/8/2008 12:56

From The TimesAugust 11, 2008

Berkeley markets 'affluent country town ambience' of Stanmore in India

[zimzoot] 11/8/2008 12:53

Goldman Sachs sector upgrade

[georgethefourth] 25/7/2008 17:21

cheers jonwig. i take it these havent yet been paid for though

[jonwig] 25/7/2008 14:56

George, I suspect it's this ('Land Holdings'):

At 30th April 2008, the Group (including joint ventures) controlled some 31,365 plots with an estimated gross margin of £2,728 million. This compares with 30,128 plots and an estimated gross margin of £2,234 million at 30th April 2007. Of these holdings, 23,065 plots (2007 - 21,209) are owned and included on the balance sheet. In addition, 8,014 plots (2007 - 8,848) are contracted and a further 286 plots (2007 - 71) have terms agreed and solicitors instructed. In excess of 95% of our holdings are on brown-field or recycled land.

So the balance of the £2.7bn will come onto the accounts once terms are settled.