Persimmon recommends final £350m shareholder dividend payment as it hails ‘strong’ start to 2019

York-headquartered Persimmon has hailed a strong start to 2019 in a trading update this morning which states its forward sales revenue stands at £2.6m even though though the number of sales reservations has dropped.  

Updating the market on the period from 1 January 2019 to date, ahead of its Annual General Meeting being held today, the listed housebuilder said it had 350 active sales outlets for the year to date (2018: 375).

The listed firm last year hit criticism for the executive pay it paid to its former CEO, Jeff Fairburn. At the time, the Board announced that three additional payments would be made under the Capital Return Plan  of 125p per share, paid each year for the three years ending 2020.

The second of these additional payments amounting to £398m was made as an interim dividend on 29 March 2019. The Board has also recommended a scheduled return of 110p per share, or £350m, to be paid to shareholders on 2 July 2019 as a final dividend.

It added: “The Group’s current forward sales position is strong with total forward sales revenue, including legal completions taken to date in 2019, of £2,698m(2018: £2,798m).”

However, its weekly private sales rate per site since the start of the year was 5% lower than the previous year. Persimmon said: “Pricing conditions remain firm across our regional markets, the average selling price of sales to the private market in our forward order book being £237,850 (2018: c. £236,500). The Group has also maintained a substantial forward order book of new homes for delivery to our Housing Association partners.”

Persimmon added: “Since the start of the year the new build housing market has proved resilient with high levels of employment and low interest rates continuing to support consumer confidence. With mortgage lenders continuing to offer attractive products, the level of customer activity has been encouraging with visitor levels to site, sales conversion rates and cancellation rates all running in line with our expectations.

“As part of our previously communicated plans to improve our service to customers, in particular providing greater accuracy of anticipated moving-in dates, we are continuing to take a more targeted approach to the timing of sales releases on a number of sites and to progress build to a more advanced stage before releasing homes for sale to the market where demand is strong.

“As expected, these measures have reduced the number of sales reservations made since the start of the year but we remain confident that, with the continuation of current market conditions, these sites will make a good contribution to sales once build has progressed and homes are released for sale.

“Overall, sales reservations remain in line with our expectations and we currently anticipate achieving a similar level of legal completions in the first half as last year. The Group’s legal completions for the second half of the year will be similarly determined by our continued focus on progressing our build programmes ahead of sales release together with prevailing market conditions.”   

Persimmon said that in the timeframe, it had opened 43 of the 90 new outlets planned for the first half of the year and was building new homes on all sites that have an implementable detailed planning consent.

” Given the increased uncertainties around the future performance of the UK economy we have remained very selective with the acquisition of new land during the period,” id added. 

 It has also continued to develop an off-site manufacturing capability based at its hub in Harworth, Doncaster to support the Group’s construction programmes. Its brick manufacturing factory, Brickworks, is now producing at close to optimal capacity and the construction of a new roof tile manufacturing facility, Tileworks, is “well advanced.”

Persimmon added: “We continue to expect our overall build costs to increase by c. 4% for the year. This includes ongoing investment to enhance specification in support of improved levels of customer satisfaction and is after mitigation through progressing our off-site manufacturing activity and reviewing our approach to infrastructure development costs.

The Group has recently concluded the renewal of its £300m Revolving Credit Facility to support its working capital flexibility.  

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