Berkeley postpones shareholder payout due to coronavirus

Housebuilder Berkeley Group announced on Thursday that it was postponing a planned shareholder return due to the coronavirus as it said it was on track to meet market expectations for the year ending 30 April 2020.

In an update for the period from 1 November 2019 to 29 February 2020, the company said it had seen a continuation of the good trading environment announced at the interim results, with underlying demand for its homes maintained. As a result, it is on track to meet market expectations for the year and its longer-term target to deliver £3.3bn of pre-tax profits in the six years to 30 April 2025, "assuming a measured outcome to the effect of coronavirus".

However, the company also said that it was delaying a proposed £455m increase in shareholder returns "until there is greater clarity of operational impact of coronavirus (COVID-19) on UK economic activity".

It will instead revert to the original shareholder return programme, with a £125m dividend to be paid at the end of March.

Berkeley insisted that it still intends to make the enhanced returns but will reassess the situation in its full-year announcement in June, by which time the effects of the virus will be "more measurable and certain".

"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," it said. Berkeley said that while there has been no noticeable impact on its 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."