Top UK Stocks to Watch: Berkeley Group profits return to growth

Berkeley Group says it remains committed to London, Persimmon and Aviva bow to pressure from the CMA over leaseholds, Vodafone’s European business goes green, Joules Group delivers impressive growth, and Liontrust Asset Management celebrates a stellar year.
Top News: Berkeley Group confident London can flourish again
Berkeley Group said it remains committed to London which the capital will recover from the pandemic because it revealed profit returned to growth during a troublesome year.

Revenue rose 14.7% within the year to the top of April to £2.20 billion from £1.92 billion the year before. It delivered 2,825 homes during the year at a mean price of £770,000. That compared to the two ,723 homes delivered the year before at a price of £677,000.

Berkeley Group had previously said profits would be broadly flat from the £503.7 million booked within the last fiscal year , but surprised the markets with pretax profit of £518.1 million this morning. That was also before the £516.5 million forecast by analysts. Although the return to growth are going to be welcome, profits are still way below the £775.2 million delivered within the 2019 fiscal year .

Basic earnings per share rose 4.5% to 339.4 pence from 324.9p.

Berkeley Group reaffirmed its commitment to return a minimum of £280 million to shareholders annually through to 2025 via dividends and buybacks, but it’s likely to return considerably more to investors within the new fiscal year . the corporate dished out £145.5 million in dividends during the year and an extra £188.6 million in buybacks for a complete of £334.1 million, which was up from £280.3 million the prior year.

It said it intends to return £222 million of scheduled returns within the new fiscal year and an extra £228 million of surplus capital this September through a replacement share scheme which will be followed by a share consolidation.

Berkeley shares have significantly underperformed its peers over the past year, partly due to concerns has greater exposure to London at a time when people are leaving cities, but said it remains committed to the capital and believes this ‘does not represent a permanent structural shift’ which the trends will eventually reverse and benefit Berkeley thanks to a scarcity of housing supply. Berkeley currently produces around 10% of all new private homes inbuilt London.

Berkeley Group said it expects annual output to rise by 50% by 2024/25 compared to 2018/2019 levels. the very fact 23 of its 29 long-term complex regeneration projects are now in production will go an extended thanks to supporting that ambition.

‘We ended the year in great shape, with net cash of £1.1 billion, cash due on forward sales of £1.7 billion and therefore the estimated future margin of profit in our land holdings increased to £6.9 billion, with an extra £0.6 billion within the near-term pipeline,’ said chief executive Rob Perrins.

‘This may be a very strong platform from which to continue serving the foremost under supplied housing markets within the country once the disruption caused by the pandemic dissipates and London is again ready to flourish as a worldwide destination for culture, entertainment, education, recreation and business,’ he added.

Where next for the Berkeley Group share price?
Berkeley Group share price trades between its flat 50 & 100 sma during a broadly neutral position. the worth has been trading during a tight range since early April capped on the upside by 4900 and on the lower band by 4450p.

The RSI has turned southwards and moved into bearish territory suggesting that there’s more downside to return .

A break below 4500 the 100 sma and 4450p the lower band of the horizontal channel could see the sellers devour traction and head towards 4195/4200 zone, a neighborhood which offered support several times across the beginning of the year.

Any recovery within the share price would wish to retake the 50 sma at 4625p and 4700p the June high, before testing the upper band at 4900p. Beyond here bulls could look towards 5300p the December 2019 high.

Persimmon and Aviva strike deal over leaseholds with CMA
The Competition & Markets Authority said it’s secured landmark commitments from Aviva and Persimmon that ought to help thousands of leaseholders across the united kingdom .

The CMA launched enforcement action against four housing developers last year, also as companies that had bought an outsized number of freehold sites then leased them out. the opposite three developers aren’t listed and named Brigante Properties, Abacus Land and Adriatic Land.

Aviva has pledged to get rid of all leasehold contracts that were doubling the quantity of rent payable by leaseholders every 10 to fifteen years and are now linking any increases to RPI. The doubling clause in contracts meant many leaseholders struggled to sell their properties on. Aviva is additionally repaying homeowners who were suffering from the doubling clause within the past.

Meanwhile, housebuilder Persimmon has promised to permit leaseholders the choice to shop for the freehold of their property at a reduction and can also make payments to previous customers who have bought their property.

Notably, Persimmon stopped selling leasehold properties back in 2017 so this is applicable to historic purchases.

‘This addresses concerns raised by consumers with the CMA, and native Trading Standards, that they were led to believe they might buy their freehold at a particular price, only to seek out out later that this price had increased by thousands of pounds with no warning. It also means those individuals who have already bought their freehold will receive a refund, meaning they do not miss out,’ the CMA said.

Persimmon is additionally getting to make it clearer to customers about the annual costs of shopping for a home and can give prospective buyers longer to exchange contracts once they need reserved a property after the regulator complained it had been too short and not giving buyers enough time to weigh up their options.

Persimmon, in its own statement, said it had been extending its existing Right to shop for scheme that permits leaseholders to shop for their freehold at below market price and said the ‘informal voluntary undertakings agreed today largely extend existing schemes Persimmon has in situ and are made with none admission of wrongdoing or liability.’

‘This may be a real win for thousands of leaseholders – for too long people have found themselves trapped in homes they will struggle to sell or been faced with unexpectedly high prices to shop for their freehold. Now, they will breathe a sigh of relief knowing things are set to vary for the higher ,’ said CMA chief executive Andrea Coscelli.

‘It’s good that Aviva and Persimmon have responded positively to the present investigation, enabling these issues to be fixed for leaseholders. But our work isn’t done. We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they will expect to face action ,’ Coscelli added.

Persimmon shares were trading 1.5% lower in early trade this morning at 2992p, while Aviva shares were down 0.5% at 414.6p.

Vodafone’s European network goes green
Vodafone said its entire European network – from its networks and data centres to its retail stores and offices – are going to be 100% powered using electricity generated from renewable sources from next month, marking a serious step toward its goals to be more environmentally-friendly.

‘From 1 July 2021, Vodafone’s customers across Europe are often reassured that the connectivity they use is entirely powered by electricity from renewable sources. this is often a serious milestone towards our goal of reducing our own global carbon emissions to net zero by 2030, helping our customers reduce their own environmental footprint and continuing to create an inclusive and sustainable digital society altogether of our markets,’ said chief executive Nick Read.

The achievement forms a part of Vodafone’s ambition to be a net-zero carbon emissions business by 2030, and for its wider value chain to follow by 2040. Originally, Vodafone was getting to have its European network powered by renewables by 2025 before accelerating its efforts last year.

Vodafone said it intends for its operations across Africa to travel green by 2025.

Vodafone shares were trading 0.7% higher in early trade this morning at 131.44p.

Joules Group delivers impressive growth despite lockdowns
Clothing and homeware firm Joules Group said it delivered strong growth and returned to profit within the recently-ended fiscal year as its strong digital offering cushioned the blow from the lost sales in-store during lockdown.

The company said revenue rose 4% within the year to the top of May to £199.0 million rom £190.8 million the year before. While it had been a troublesome year for physical store sales, Joules Group benefited from its strong digital offering, growing customer numbers and therefore the added contribution from the acquisition of Garden Trading Co in February.

Retail revenue, which mixes sales made future and online, rose 9% within the year because the 41% fall in own-store sales was quite offset by a 48% rise in sales on its own websites.

‘The impact of the coronavirus pandemic on the lives of consumers, the extent of disruption and pace of change within the retail sector over the past 12 months has been truly unprecedented. i’m delighted that, against this backdrop, Joules has been ready to deliver a really solid financial performance and powerful strategic progress. This outcome primarily reflects, firstly, the strength and relevance of the Joules brand to an increasing number of consumers and, secondly, the increasing importance of our digital proposition both to customers and within our business model, with approximately 77% of our retail sales now generated online,’ said chief executive Nick Jones.

Joules said pretax profit before exceptionals should be within the range of £5.5 million to £6.5 million. which will be welcomed considering it booked a £2 million loss the year before, and is well before analyst expectations.

Despite the positive news, Joules Group shares plunged 9.4% in early trade this morning at 266.0p. Still, the stock has risen over 50% since the beginning of 2021 alone.

Joules has been encouraged by the performance of its stores since they reopened in April. Sales within the first eight weeks since reopening the doors are above pre-pandemic levels. Meanwhile, Garden Trading has performed better than expected within the first few months of ownership, with revenue 78% higher year-on-year.

Joules Group ended May with net cash of £4.7 million and £39 million of headroom within its existing credit facilities.

‘As we enter the new fiscal year , Joules is now a stronger and more diversified business than ever before. The continued success and growth of our Friends of Joules digital marketplace and our strengthened position within the home, garden & outdoor sector following the acquisition of Garden Trading means we now offer significantly more products across more categories and supply our customers with more choice and reasons to buy with us. As a results of the strength of the Joules brand and therefore the increasing diversification of the Group’s digital-led business model, we believe that the Group is extremely well positioned to still deliver its ambitious growth plans,’ Jones said.

Liontrust Asset Management hikes dividend after stellar year
Liontrust Asset Management said it’s hiked its dividend after almost doubling the quantity of assets under management during its recently-ended fiscal year , during which it also delivered stellar growth in revenue and profits.

Revenue within the year to the top of March increased 54% to £164.0 million from £107.0 million the year before. It ended the amount with assets under management of £30.9 billion, almost double the £16.1 billion on the books a year earlier. Notably, that has increased further to £33.27 billion by June 18.

The independent fund manager said adjusted pretax profit increased 69% to £64.3 million from £38.1 million the year before, with reported pretax profit quite doubling to £34.9 million from £16.5 million.

Liontrust said it’ll pay a final dividend of 36.0 pence, taking the entire payout for the year to 47.0p, up 42% from the 33.0p paid out last year. That hike came as net inflows jumped 30% to £3.49 billion from £2.69 billion. Dividends have now grown by a mean of 33% per annum since 2017.

‘Liontrust has strong momentum and is well positioned to continue growing. we’ve excellent investment teams, with impressive long-term performance and investment processes. This has received extensive independent recognition over the past year,’ said chief executive John Ions.

‘We have successfully been diversifying our product range and distribution to make sure we will continue the rise in net flows,’ he added.