Rob Perrins, finance director of Berkeley, has overseen this transformation, the latest instalment of which involves the closure of Thirlstone, its upmarket homes division.
The closure took place in February after the board decided that the subsidiary, founded by Tony Pidgley Jnr, managing director Tony Pidgley’s son, no longer fitted into the business plan. It prompted Pidgley Jnr’s departure from the company – for a second time.
Perrins said: ‘We are concentrating on urban regeneration schemes such as Imperial Wharf, which comprises of 1,600 units in Fulham.’ The FD will now decide on how to account for the closure of this branch.
The new focus on regeneration and traditional housing will be reflected in the 2003 annual accounts which, for the second year, are being prepared under new accounting policies created for the shift in its business focus.
The new policy means that, in traditional house building, it now recognises ‘revenue and profit on physical completion, which will bring (it) closer into line with the majority of other companies in the sector’.
‘The policy for complex multi-unit schemes will be to recognise revenue and profit on a phased basis reflecting the underlying activity of the scheme within the financial period,’ a company statement read.
The new accounting measures were first revealed when they were used in the results to 30 April 2002. The changes led to the company’s accounts for the two previous years also being restated, for the sake of comparison.
The effects of the changes meant that in April 2002 pre-tax profits fell by around 7% and the opening shareholders’ fund in May 2001 decreased.
Berkeley also adopted FRS 19, the deferred tax standard, during the year.
It had first used the standard in the interim accounts to October 2001, resulting in increased shareholders’ funds of £760,000 in May 2001.
But the company has recently been fighting fears of a slowing in the sector, anxieties that the FD already played down last June. He said: ‘We might experience an easing or correction in the market, but we do not expect a major downturn.’
Recently, mortgage lenders asked the Bank of England to put up interest rates to try to stem the housing boom. But Perrins said the demand for housing would remain, adding: ‘We would welcome it if the bank put up interest rates by one percentage point in a single go to 5%. That would take some of the heat out of the market. What we don’t want is a drip, drip of small interest rate increases.’ – Email: email@example.com.