The housebuilder Berkeley has pledged to pay out £1bn to shareholders over the next two years, almost doubling the planned financial award to its investors.
The FTSE 100 company has ridden the booming British property market since the financial crisis, with house prices rising particularly in London and south-east England, its main sources of revenue. Those price rises came despite the political uncertainty caused by the Brexit vote.
Analysts said the new returns to shareholders reflected renewed certainty after the Conservative party’s general election victory, as well as confidence in the returns from 20 separate construction sites that it has secured.
Under the proposals revealed on Wednesday Berkeley said it will distribute about £500m in March through a share issue and buyback, followed by another £500m in March 2021.
That represents an increase from the £545m of returns due to be made by the end of September 2021.
Shares rose by 5% on Wednesday to a record high, briefly breaking the £55 mark before retreating to £54.40.
Berkeley said it has held back investment in light of the “volatile operating environment” since 2016, the year of the EU referendum. During that time its net cash position has increased from £107.5m to more than £1bn.
Those cash reserves could be partially run down, with a 50% increase in production and delivery of houses planned over the next six years.
In June the company warned that bumper profit levels that neared £1bn annually would not be sustained, but it still expects to deliver profits of more than £3.3bn over the six years to 30 April 2025. Annual earnings are expected to come in between £500m and £700m.
Berkeley also said it would consult shareholders on its pay policies. It will aim to ensure that pay “remains closely aligned to Berkeley’s strategy, including capital allocation”.
The company has previously faced criticism for the high pay of executives, including that of the founder and chairman, Tony Pidgley. Pidgley’s pay was cut to £8.3m during the last two financial years, but in 2016-17 under the previous remuneration policy he received £29.2m. From 2009 to 2019 he received remuneration worth more than £105m, according to company reports.
