Berkeley turned its land into cash in 1988 just as the house market was bubbling out of control. Then two years ago it caught the commercial property market at its nadir, setting up a joint venture with a Middle Eastern investor with stronger nerves than the City.
Results for the year to April confirmed the skill of Berkeley's timing. Pre-tax profits rose 25 per cent to pounds 15.8m on sales up from pounds 126m to pounds 182m. Earnings per share were 22 per cent higher at 16p. A dividend of 6p represents a 20 per cent increase in the payout.
Those figures confirm the wisdom of Berkeley's policy of avoiding long land banks. Because of the cost of tying up working capital in land, holding several years' sites makes sense only if the price of land is rising sharply. When the market is in reverse the effect can be devastating.
Berkeley buys land, builds on it relatively quickly and sells the house to generate cash for the next project. As a result gross margins, although under pressure from an estimated 8 per cent fall in house prices last year, remained a respectable 16 per cent.
The approach also means that the balance sheet is rock solid. Even stripping out pounds 44m from the March rights issue, the group has pounds 4m of net cash. It is in a strong position to buy land now that prices are firming.
The property leg, started in 1991 when one building was picked up for a now scarcely believable 14.5 per cent yield, is well on the way to building up a pounds 200m portfolio. Within the past few weeks yields have fallen sharply, implying a tidy capital gain.
Group profits look likely to reach pounds 25m this year, rising to pounds 30m in 1995. Earnings per share of 21.8p put the shares, down 1p yesterday to 404p, on a prospective p/e of 19.
That is asking a lot of an extremely tentative recovery in the house market.
Berkeley may not have put a foot wrong in the slump, but its shares, having outperformed the market by 66 per cent since last September, are looking a long way into the recovery. High enough.