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Berkeley pretax profit falls 38%

BRITISH property developer and house builder Berkeley Group said full-year profit fell 38 percent in challenging market conditions, but it had bucked the sector by generating cash and avoiding writedowns.

Berkeley also said yesterday co-founder Tony Pidgley would step down as managing director after 33 years to become chairman and be succeeded by his long-designated successor, finance director Rob Perrins, in a widely expected move. The group remained cautious about its outlook, with the value of sales reservations half the historic average.

"You've got ups and down. Prices are leveling, (but) transaction levels could dip again if mortgages don't come through," Perrins said.

Berkeley, focused on developments in London and southeast England, said pretax profit fell to 120.4 million pounds (US$196 million) in the year to end-April, below the consensus forecast for 132 million pounds, according to Reuters Estimates.

It had net cash of 285 million pounds at the end of the year, after raising 50 million pounds to boost its cash pile for land acquisitions earlier this year.

"(This is) bang in line with our expectations and still comfortably ahead of the rest of the industry," said analysts at Citi.

On Thursday, Saudi investor Saad Group, a long-term shareholder, said it had sold a further 4.5 million shares in Berkeley, taking its stake to just 2.73 percent from 29 percent.

"The balance sheet is not exposed," said Pidgley. The company said joint ventures with Saad were worth 18.7 million pounds. "Half of that is his, half is ours," said Pidgley.

The company is currently in talks with Saad's advisors, which may involve Berkeley taking the equity of Saudi billionaire chairman, Maan al-Sanea, he said.

Privately held investment company Saad has said it is restructuring its US$6 billion debts after it ran into difficulties earlier in June.


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