Berkeley Group Holdings plc (LON:BKG) today announced an update to its Shareholder Returns programme, alongside its Trading Update covering the period from 1 November 2019 to 29 February 2020. Berkeley is the country’s leading place-maker, operating principally in London, Birmingham and the South of England. We create beautiful, successful places where communities thrive and where people of all ages and backgrounds enjoy a great quality of life.
· Continued good trading environment and underlying demand
· On track to meet Market expectations for year ending 30 April 2020
· On track to deliver long term pre-tax profit target of £3.3 billion in six years ending 30 April 2025
· Proposed £455 million increase in Shareholder Returns to be postponed until there is greater clarity of operational impact of Coronavirus (COVID-19) on UK economic activity
· Reaffirmed commitment to enhanced Shareholder Returns
· Revert to the original Shareholder Returns programme with announcement of a £125 million dividend to be paid on 31 March 2020 and commitment to next £140 million of Shareholder Returns to be paid by 30 September 2020
Berkeley has experienced a continuation of the good trading environment announced with its Interim Results for the period ended 31 October 2019 on 6 December 2019, with underlying demand maintained for its homes in the period. Accordingly the business remains on track to meet market expectations for the year ended 30 April 2020 and its longer term target to deliver £3.3 billion of pre-tax profits in the six years to 30 April 2025, assuming a measured outcome to the effect of Coronavirus.
Today’s announcement is made in the context of the current increased macro uncertainty, which has been uniquely impacted by the global spread of Coronavirus. While there has been no noticeable impact on Berkeley’s business to date, the ultimate impact on UK business is unknown. There is no recent historic precedent and for this reason it is absolutely right for any responsible business to approach the next six months with a reduced risk appetite and heightened sense of caution.
This in no way alters the Board’s view of the long-term value of the business. Indeed, Berkeley’s business model is set up for the cyclicality of the housing market; to withstand downside scenarios and be well placed to take opportunities as they arise. Berkeley has net cash of in excess of £1.0 billion at the date of this statement with a further £750 million of bank facilities available.
However, on balance, the Board has decided to postpone the increase in the Shareholder Returns that was scheduled to be made via a B and C share scheme as set out in a Circular posted to Shareholders on 24 February 2020. The Board is keen to stress that it currently still intends to make the enhanced returns but will reassess this in our Full Year Results Announcement in June, by when it is indicated the effect of Coronavirus will be more measurable and certain.
In view of this postponement, the General Meeting which was convened for 18 March 2020 is being adjourned indefinitely. If having reassessed the position, the Board decides to proceed with an enhanced return requiring shareholder approval, as it currently anticipates, any proposals would be put to shareholders at the time of the Annual General Meeting in September 2020.
The circular to shareholders of 24 February 2020 also included proposals to amend the Remuneration Policy. The Board is grateful to its major shareholders who participated in the consultation on the amendments and for their positive response. The Board will reconsider appropriate amendments to be made to the remuneration policy in light of the postponement noted above, and it is expected that any such amendments would be put to shareholders for consideration at the time of the Annual General Meeting.
In the meantime, the Company will revert to its current schedule for Shareholder Returns. The Company is therefore announcing today that a dividend of £124.8 million (99.32 pence per share) will be paid on 31 March 2020 to Shareholders on the register on 20 March 2020, with an ex-dividend date of 19 March 2020. It is also committing to make the next £140.1 million return to be made by 30 September 2020 through a combination of share buy-backs and dividends.
The table below sets out the current schedule of Shareholder Returns and the proposed enhancement that is now being postponed, for information.
| £’million | Current Schedule | Postponed Revision | Cumulative difference |
| Paid for six months to 30 September 2019 | 140 | 140 | – |
| Paid for six months to 31 March 2020 | 15 | 15 | – |
| To be paid for six months to 31 March 2020 | 125 | 500 | 375 |
| To be paid for six months to 30 September 2020 | 140 | – | 235 |
| To be paid for six months to 31 March 2021 | 140 | 500 | 595 |
| To be paid for six months to 30 September 2021 | 140 | – | 455 |
| To be paid for six months to 31 March 2022 | 140 | 140 | 455 |
| Thereafter six monthly to 30 September 2025 | 140 | 140 | 455 |
