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Berkeley lifts capital return plan

The high-end housebuilder cited improved visibility on its cashflow needs
January 22, 2020

Berkeley Group (BKG) has unveiled plans to almost double its proposed capital returns to shareholders over the next two years, committing to pay out £1bn via two B-share scheme issues of £500m each in March 2020 and March 2021.

IC TIP: Hold at 5,448p

Following this, the group intends to revert to its regular yearly returns of £280m a year, via biannual instalments of £140m through either share buy-backs or dividends. 

Management said starting construction on 20 new sites - which will increase its annual housing delivery (including in its joint ventures) by as much as 50 per cent over the next six years - had given it a better idea of its cash management and development commitments. 

Including trading since last May, the group is hoping to deliver £3.3bn of pre-tax profit in the six years to April 2025, with the figure ranging between £500m and £700m, depending upon the timing projects are completed. However, that is down from a peak of £977m in 2019, reflecting a well-flagged decline in house sales and the completion of several major projects.