Berkeley defers £455m surplus cash return as profit declines

Berkeley deferred returning £455m of surplus capital to shareholders for up to two years as the housebuilder reported a 35% drop in annual profit and almost £1.9bn of forward sales.

Pretax profit for the year to the end of April fell to £503.7m from 775.2m a year earlier as revenue dropped 35.1% to £1.92bn. The London-focused housebuilder's profit was ahead of guidance revised down to £475m in March as the Covid-19 crisis hit the construction industry.

Berkeley paid out £280.3m during the year to shareholders, up from £252m a year earlier, comprising £149.8m in dividends and £130.5m of share buybacks. It said the fall in annual profit was a return to normal levels after completing several central London developments acquired between 2009 and 2013.

The FTSE 100 company said it had deferred returning £455m of surplus capital to give it more flexibility during the crisis and invest in new land if opportunities come up. Berkeley stuck to its longer-term target of returning £280m a year to shareholders with £140m due at the end of September.

Berkeley reduced production to 40% of normal capacity early in the coronavirus lockdown but put safety measures in place that allowed it to increase activity back to 80% of capacity. The company said cash due on forward sales was £1.86bn, little changed from £1.83bn a year earlier.

The company ended the year with £1.14bn of cash, up from £975m a year earlier, with total liquidity including bank facilities of £750m.

Chairman Tony Pidgley said: "These results reflect a strong performance for the year…The onset of the Covid-19 lock-down in the last five weeks of the period had a significant impact on our operating environment, but Berkeley ended the year in a strong financial and operational position as our resilient business model and agile working culture defined our response."