Berkeley Group Reports Resilient H1 Profits and Reaffirms Full-Year Guidance Amid Market Volatility

Berkeley Group’s H1: solid profits, strong balance sheet, and a clear plan through the cycle

Berkeley Group has turned in a resilient first half. Pre-tax profit came in at £254.0 million for the six months to 31 October 2025, with operating margin nudging up to 20.8%. Net cash closed at £342 million despite £132 million of buy-backs, and net asset value per share rose 4.7% to £37.63.

Management reaffirmed guidance for full-year FY26 pre-tax profit of £450 million and flagged a “similar level” for FY27. In short: delivery is matching the plan, even as reservations softened ahead of the Budget and the regulatory backdrop remains heavy.

H1 at a glance: the key numbers investors care about

Metric	H1 FY26 (to 31 Oct 2025)	H1 FY25	Change
Revenue	£1,179.5m	£1,278.9m	-7.8%
Operating margin	20.8%	20.2%	+0.6 pp
Profit before tax	£254.0m	£275.1m	-7.7%
Basic EPS	183.7p	186.8p	-1.7%
Homes delivered	2,022 (plus 82 in JVs)	2,103 (plus 177)	Lower

Balance sheet & order book	31 Oct 2025	30 Apr 2025	Change
Net cash	£342m	£337m	+£5m
NAV per share	£37.63	£35.95	+4.7%
Cash due on forward sales	£1,137m	£1,403m	-£266m
Future gross margin in land holdings	£6,512m	£6,722m	-£210m
Pipeline plots (approx.)	14,000	12,000	+2,000

Guidance intact: 56% of full-year PBT already banked

Legal completions ran ahead of reservation rates, with management noting 56% of full-year pre-tax profit guidance delivered in H1. That gives a decent buffer for H2. The order book has reduced – cash due on forward sales fell to £1,137 million – but pricing is slightly ahead of business plan levels set at the start of the year.

In my view, this is a classic Berkeley playbook: protect cash, focus on margin, and pace delivery to demand. It helps that operating costs were 6% lower year-on-year and build costs were flat thanks to competitive tendering.

Sales and sentiment: softer reservations, stable pricing

Customer interest was “good”, but the value of private sales reservations ended the period around 4% below last year, with a softer final two months ahead of the Budget. Average selling price on completions slipped to £570,000 (2024: £600,000), reflecting mix rather than discounting.

With gilt markets reacting positively post‑Budget and management expecting interest rates to resume their descent, the set‑up for H2 looks better. The risk, as ever, is timing: if mortgage rates fall slower than hoped, sentiment could lag.

Margins, tax and cash: why the P&L held up

• Gross margin rose to 27.0% (2024: 26.5%), supporting a higher operating margin at 20.8%.
• Net finance income was £3.2 million, helped by interest on more than £1.0 billion of gross cash during the period.
• The effective tax rate was 29.7%, including the 4% Residential Property Developer Tax and 25% Corporation Tax.
• Net cash finished at £342.2 million, after £132.0 million of buy-backs, £80 million of land creditor payments and £30 million of build-to-rent (BTR) construction spend. Total liquidity sits at roughly £1.5 billion.

Opinion: buying back 3.5 million shares at an average £37.19 when NAV per share is £37.63 is marginally accretive and signals confidence. Management also calls out “dislocation in the share price” and says it will prioritise shareholder returns – a supportive stance for the equity story.

Land, planning and the BSR: opportunity with friction

Berkeley secured three notable planning consents – Borough Triangle (890 homes), Hemel Hempstead (485) and Brighton gasworks (480). Two additional conditional sites were added to the pipeline: a 4.5‑acre West London site and a 145‑acre Bromley site. The pipeline rose to around 14,000 plots.

The future gross margin embedded in land holdings dipped to £6.51 billion (from £6.72 billion), partly reflecting profit taken through the income statement and the ever‑present grind of regulation and costs. A key operational pinch point remains the Building Safety Regulator’s Gateway 2 approvals. Any sustained improvement here would be a catalyst for starts and cash conversion.

Berkeley Living: BTR platform gathers pace ahead of 2026 launch

The in‑house BTR platform now has six buildings transferred, totalling 1,122 homes in production, with the first opening – Foundry Yard at Alexandra Gate, Haringey – due in Spring 2026. The indicative portfolio remains 4,000 homes, backed by £1.2 billion of committed investment within the Berkeley 2035 plan.

Why it matters: BTR introduces an income stream that is attractive to institutional capital. Management has optionality to sell assets, bring in third‑party equity, or layer debt at the asset level. In today’s market of constrained for‑sale absorption, that optionality is valuable.

ESG and delivery: steady execution behind the scenes

89% of homes delivered were on brownfield land. Customer metrics remain industry leading (Net Promoter Score +76.9) and the group retained an ‘AAA’ MSCI ESG rating. These won’t move the share price on their own, but they underpin brand strength and planning credibility – both important in London and the South‑East.

What’s positive for shareholders

• Guidance reaffirmed: on track for £450 million FY26 PBT and a similar outcome in FY27.
• Balance sheet strength: £342 million net cash and £1.5 billion liquidity provide resilience and firepower.
• Margin discipline: operating margin up to 20.8%; build costs flat; overheads down 6%.
• Capital returns: £132 million buy-backs in H1, with £640 million targeted by September 2030 under Berkeley 2035.
• Optionality: 4,000‑home BTR platform progressing amid strong rental demand.

Where I’d keep a cautious eye

• Order book lower: cash due on forward sales fell to £1,137 million, reducing near‑term visibility.
• Sales rates: reservations value ~4% behind the prior period and around 30% lower over two years.
• Regulatory drag: Building Safety Regulator approvals remain a gating factor for starts and cash conversion.
• Land economics: embedded future gross margin in land holdings slipped by £210 million since April.

What to watch next

• Delivery against the £450 million FY26 PBT guidance and cash generation in H2.
• Trend in private reservations post‑Budget and as mortgage rates ease.
• Progress on BSR Gateway approvals and any further policy moves to boost London viability.
• Berkeley Living milestones: Spring 2026 opening at Alexandra Gate and additional asset transfers.
• Phasing of the next £640 million shareholder returns target by 30 September 2030.

Bottom line: a high‑quality London exposure with a conservative stance

Berkeley is doing what it does best: protect the balance sheet, lean into margin, and deploy capital where the risk‑adjusted returns make sense. There are headwinds – slower reservations and regulatory friction – but the combination of net cash, prime London exposure, and the BTR platform gives it ample ways to win through the cycle.

If you want more detail straight from the horse’s mouth, the company’s pre‑recorded presentation is available at 11:00 today here: berkeleygroup.co.uk/investors/results-and-announcements.