Housebuilder Berkeley (BKG) gained 3.6% to £43.75 on a set of results which underlined just how financially strong the business is.
For the year ended 30 April 2020, pre-tax profit fell 35% to £503.7m and revenue fell 35.1% to £1.9bn.
The company sold 2,723 homes, down from 3,698, at an average selling price of £677,000, down from £748,000, reflecting the mix of properties sold in the year.
'These results represent a strong performance and are in line with the guidance in place at the start of the year,' the company said.
Perhaps the biggest takeaway from the results was the huge net cash position, totaling some £1.14bn. This has enabled it to maintain its dividend commitments when the rest of sector has put pay-outs on pause. The group says it will continue to return £280m per year through to 2025.
'Housebuilding and construction can play a vital role in the broader economic recovery following Covid-19,' Berkeley added.
'This will require government support, similar to that seen following the 2008/09 financial crisis, including: the reversal of the property tax increases seen since 2014; a reduction in the bureaucracy and cost of planning; and direct investment into affordable housing.'
Chairman Tony Pidgley has a reputation for being a shrewd operator in the housing market and the company is deferring the return of £455m of excess cash to give it the flexibility to invest in new land if opportunities arise, which is likely in the current environment.
Canaccord Genuity says: ‘The group has the resources to take advantage of a potentially weaker and more attractive land market and has a strong land bank (c.£6.4bn of gross margin), forward sales position and its cash position supports its medium-term profit guidance assuming demand recovers to more normal levels.’
