Pre-tax profits rise to £977m at Persimmon

Housebuilder Persimmon has reported a 25% pre-tax profit rise to £977m in its annual results this morning, as the York-headquartered firm also announced the appointment of an acting chairman.

The firm said that in 2017, the legal completions increased by 872 new homes to 16,043, up from  15,171 in 2016, and average selling price increased by 3.2% to £213,321  – from £206,765 in the previous year.

Its revenue for the year was up 9% to £3.42bn (2016: £3.14bn) and the housebuilder reported a  25% increase in underlying pre- tax profit to £977.1m (2016: £782.8m).

Persimmon also saw a 26% increase in underlying basic earnings per share to 258.6p (2016: 205.6p) and an 18% increase in cash generation, pre capital returns, to £806m (2016: £681m).

Its interim and final dividends were declared of 125p and 110p per share respectively.

The Group said its continued outperformance and generation of surplus capital in 2017 enabled a further increase in the Capital Return Plan. This Additional Capital Return payments of 125 pence per share to be made each year for the next three years ending in 2020, increasing the total value of the Plan by 375 pence per share to £13 per share

Persimmon said the new additional returns will be paid as an interim dividend in late March/early April each year. The first of these additional payments will be made on 29 March as an interim dividend in respect of the financial year ended 31 December 2017, totalling £390m.

In addition, the Board confirmed that the scheduled capital return of 110 pence per share, £340m, will be paid, subject to shareholder approval, on 2 July 2018 as a final dividend in respect of the financial year ended 31 December 2017.

The total value of the Capital Return Plan is estimated to be £4.1bn or £13 per share –  over double the original plan value of £6.20 per share.

Nigel Mills has also been announced as the acting chairman at Persimmon and he also be chairman of the Nomination Committee in the interim period. Today’s announcement followed the resignation of  Nicholas Wrigley, which was announced in December and is effective from yesterday.   

Persimmon said the board is making progress towards the appointment of a new chairman and will make a further announcement in due course.

Wrigley was one of two board directors who resigned last year after they felt they should have included a cap on a  bonus scheme which led to directors at the firm receiving an uncapped bonus running into millions.

Mills said of the company’s annual results: “Persimmon’s performance in 2017 has been excellent. The Group’s focus on high quality growth, coupled with capital discipline, has accelerated the delivery of our strategic objectives and generated record returns for our shareholders.

“The Group’s outstanding performance is demonstrated by both the strength of the financial position of the business and the quality of the asset platform, which provides the opportunity to continue to deliver excellent returns moving forwards. Since the launch of the Group’s new strategy in 2012 the Group has increased new home completion volumes by more than 70% and invested c. £3.18bn of cash in land while simultaneously returning c. £1.49bn of surplus capital to shareholders.

“The start to the spring sales season in 2018 has been encouraging with the Group’s private sales rate per site being 7% higher than last year at this point. The further increase in the Capital Return Plan demonstrates the Board’s confidence in the Group’s prospects.”