In a week that started with news of bid approaches to troubled housebuilder Bovis Homes PLC (LON:BVS), its bigger peer Berkeley Group PLC (LON:BKG) – which earlier this year was urged to take over Bovis – will book-end the period with a trading update.
Berkeley – “London’s pre-eminent housebuilder” – is facing challenging times with the higher end of the UK capital’s market slowing down since last June’s Brexit vote.
The company also gets few benefits from the government’s Help to Buy programme, which is targeted at the cheaper end of the market, and recent high-end changes to Stamp Duty have also been unhelpful to its business.
On the plus side, Berkeley retains its aspirational brand, while its strong balance sheet means it is always ready to buy land when prices look attractive.
That balance sheet strength has enabled the company to start buying back shares, which clouds the dividend story slightly, according to analysts at Barclays.
In a recent note, Barclays also poured cold water on the notion that Berkeley would use its cash pile to buy out its struggling competitor – a move which a shareholder in Bovis was suggesting at the start of the year following that group’s shock profit warning and departure of its chief executive.
Comments on the impact of Brexit will be key, with Berkeley recently having revealed that 45% of its buyers are from overseas, and of those around 30% are owner-occupiers.
Brexit factors will be a focus for recruitment firm SThree PLC (LON:STHR) as well, which also issues a trading update on Friday.
The international specialist staffing group - which provides permanent and contract staff to a diverse client base, including technology, banking, energy and engineering - saw its full-year 2016 pretax profits slip by 1%, although its adjusted revenues rose by 6%.
In the full-year results statement, SThree’s CEO Gary Elden called 2016 a “challenging financial environment” although he added that there was a “resilience to our earnings, enabling us to weather the political and economic uncertainties”.
With the triggering of the two-year Brexit process set to come by the end of this month, investors will be looking for further clarity from SThree on how the staffing markets could be affected.
Significant announcements expected on Friday:
Trading updates: Berkeley Group Holdings PLC (LON:BKG), Goodwin plc (LON:GDWN)), SThree PLC (LON:STHR)
Finals: React Group PLC (LON:REAT)