Berkeley reports sharp boost in profits and sales

Housebuilder Berkeley has reported a sharp boost in sales and profits and outlined a ten year strategic plan which includes a return of £1.7bn in dividends to its shareholders.

However the board intends to adjourn dividend payments for four years to allow the company to buy land and maintain cashflow.

Details of the strategic plan were announced in Berkley’s end of year results for the period up to 30 April 2011. Pre-tax profits for the group grew 23.5% to £132.2m – while revenues jumped up 21% from £615.3m to £742.6m.

Commenting on the strategic plan, chairman Tony Pidgeley said the payout would be a reward to shareholders for supporting “the board’s proposal to invest at the right point in the cycle.” He added:

“The long term plan announced today puts in place an exciting and challenging proposition that builds on the strengths of Berkeley’s unique business model to realise significant value in cash for existing shareholders, yet retains sufficient working capital to invest in the continuing business and provides a real incentive for management to maximise its long term value.”

As part of the plan each shareholder will receive a £13 per share dividend at the end of September 2015, 2018 and 2021.

During the year Berkeley sold 2,544 homes at an average selling price of £271,000 – compared with 2,201 units sold at £263,000 the year before.

Rob Perrins, managing director for the group, said the results reflected the strength of demand for property in London and the South-east.

“The 20.2% growth in earnings per share reflects the depth of demand for well-located property in London and the South-east where supply is constrained and Berkeley has the land and expertise to deliver quality homes and places,” he said.

“In addition, Berkeley has acquired some 3,600 plots across 24 sites in excellent locations during the year, and has increased the number of active sites in line with our strategy to invest at this point in the cycle.”