Berkeley bets on housing: Southern builder's joint venture focuses on recovery

BERKELEY, the house builder based in the South-east, is to set up a joint venture property development company with Higgs and Hill, the contractor responsible for the Mound Stand at Lord's cricket ground.

The agreement was welcomed in the City, where Berkeley's share price closed 20p higher yesterday at 480p, following an 83 per cent jump in interim pre-tax profits to pounds 12.6m.

Earnings per share were 50 per cent higher at 11.0p and the interim dividend was raised 15 per cent to 1.9p. Following a pounds 44m rights issue in March, the company ended the period with net cash of pounds 42m.

Tony Pidgeley, managing director, said prospects for the housing market were the best for five years.

Profits growth had stemmed from both volume and margin improvements, with completions increased from 486 to 656 and return on sales more than 2 percentage points better at 19 per cent.

Mr Pidgeley said that Berkeley's property investment joint venture with Saad, a Saudi Arabian investor, had committed pounds 130m out of an original target of pounds 200m.

He thought the portfolio, which generates rents worth 10.5 per cent of its purchase price, had appreciated substantially.

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