Berkeley Group trading update

The Berkeley Group Holdings plc (“Berkeley” or the “Company”) is holding its Annual General Meeting on 6 September, at which it will provide the following Trading Update which covers the period from 1 May 2019 to 31 August 2019. Berkeley is the country’s leading place-maker, operating principally in London, Birmingham and the South East. Our purpose is to create homes, strengthen communities and improve people’s lives. Our sustained commercial success enables the valuable and enduring contributions we make to society, the economy and the natural world.

In the first four months of this new financial year, market conditions in London and the South East have remained robust and consistent with those reported with the full year results in June. Pricing has remained stable and the Group’s forward sales position remains above £1.8 billion.

There is good underlying demand for new homes built to a high quality that are well located and properly priced to meet the local housing need, supported by good availability of mortgages. The wider market remains constrained by high transaction costs and the uncertainty in the macro political and economic environment.

Berkeley’s is a long-term business. We are currently working on over 20 of the largest residential development opportunities in London and the South East, which will be delivering homes up to and, in many cases, beyond the end of the next decade. These carry a high level of complexity and risk, requiring extensive capital, patience and expertise to deliver. Berkeley has continued to invest its resources in bringing forward the next generation of these sites into development but, like all responsible businesses at this time, has remained cautious in investing in new opportunities. As a consequence, Berkeley anticipates net cash at the half year to be at a similar level to the full year position of £975 million, subject to the volume of any share buy-backs and investment in new land in the intervening period.

With the land in place for the next phase of its business plan and continued robust trading, last year Berkeley announced the extension of its £280 million (£2.22 per share) annual shareholder returns programme to 2025, with a targeted pre-tax return on equity of at least 15% over this period.

The long-term nature of the business, with an unrelenting focus on the customer and communities, coupled with the complexity associated with delivering tall buildings, means that Berkeley has always focused on long-term value creation, as opposed to annual profit targets. Over the six years to 30 April 2025, we are targeting the delivery of £3.3 billion of pre-tax profit, with the profit in any one year ranging between £500 million and £700 million, depending upon the timing of delivery.

While very mindful of the potential for short-term market dislocations from the current political back-drop, we remain steadfast in our belief in the long-term resilience and attraction of our markets of London, Birmingham and the South East. We continue to work with our supply chain to assess and address the risks associated with disruptive Brexit to the extent this is possible, including accelerating the delivery of certain materials and components.

As announced on 15 August 2019 a dividend of £25.2 million, or 20.08 pence per share, will be paid to shareholders on 13 September 2019 with the remainder of the £139.2 million return for the six months ending 30 September 2019 having already been satisfied through share buy-backs. The Company also announced that the next six-monthly return of £139.7 million (£1.11 per share) will be made by 31 March 2020, with the amount to be paid as dividend to be announced before the end of February 2020, taking account of any share buy-backs in the intervening period.