Persimmon profits top £1bn

Persimmon profits top £1bn

Dave Jenkinson

Persimmon has released results showing profits exceeding £1bn for the first time.

Annual profits jumped 13% to £1.091bn at the housebuilder which was caught in a pay row last year and is under scrutiny over its continued involvement in the Help to Buy scheme.

The profits for 2018 were up from £966m in 2017.

The publishing of the results was also used to confirm that interim chief executive, Dave Jenkinson, will remain in that role permanently.

His predecessor, Jeff Fairburn, left last year following controversy over his £75m pay package.

The results come a day after shares in Persimmon fell 5% fell because of questions over its continued involvement in the Help to Buy scheme.

The firm sold 7,970 homes under the scheme in 2018, up from 7,682 in 2017.

Mr Jenkinson has been with the firm for 22 years and had been interim chief executive since November, following Mr Fairburn’s departure.

He said: “Our results for 2018 reflect our successful focus on offering attractively priced new homes primarily to the first-time buyer and first-time mover markets, where housing need is greatest.

“This strategy has enabled Persimmon to grow its construction volumes by more than 75% since 2012, making a significant contribution to UK housing supply.

“My focus is to build on this strong platform, maintaining our operational momentum, but also implementing a number of necessary new initiatives in customer care.”

Chairman Roger Devlin said: “Persimmon is changing. In his short time as interim CEO, Dave Jenkinson has introduced new approaches to customer satisfaction and colleague engagement, whilst also ensuring that the group delivered another year of growth.”

The company’s total group revenue for the year increased by 4% to £3.74bn, up from £3.60bn in 2017.

Looking ahead, the company said in a statement: “Whilst sales expectations remain subject to a degree of uncertainty at the start of any financial year, the lack of clarity with respect to the UK’s exit from the EU is currently creating additional unpredictability.”

It added: “We have worked with our suppliers to identify any material supplies which may be exposed to some disruption to availability as a result of Brexit and we are working with them to adopt appropriate mitigating measures.”

Persimmon Results:

  • Legal completion volumes increased by 406 new homes to 16,449 (2017: 16,043) with an average selling price of £215,563, up 1% year on year (2017: £213,321)
  • Total Group revenue for the year increased by 4% to £3.74bn (2017: £3.60bn)
  • 2018 new housing operating margin* of 30.8% increased from 28.2% last year, with a second half new housing operating margin* of 31.8% 
  • 13% increase in total Group operating profits to £1.083bn (2017: £0.955bn)
  • 13% increase in Group profit before tax to £1.091bn (2017: £0.966bn)
  • 11% increase in basic earnings per share to 283.3p (2017: 255.0p)
  • 8% return on average capital employed** (2017: 51.5%)
  • 17,092 plots of land acquired in the year, with 3,772 plots successfully converted from the Group’s strategic land portfolio
  • Net cash of £1.048bn at 31 December 2018 (2017: £1.303bn)
  • Strong forward sales position at £2.02bn (2018: £2.03bn)
  • Interim and Final dividends of 125p and 110p per share respectively declared for 2018
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