Persimmon profits rise 35% to £630m
House-builder Persimmon is halfway through a nine-and-a-half-year strategic plan and things are going rather better than the directors had expected.
Revenues increased by 13% in 2015 to £2,901.7m (2014: £2,573.9m). Pre-tax profit was up 35% to £629.5m (2014: £467.0m).
Underlying operating profit for 2015 increased by 34% to £634.5m (2014: £473.3m). At an operating level, the profit margin increased to 21.9% (2014: 18.4%), with the second half hitting 23.0%.
New home legal completion volumes increased by 8% to 14,572 (2014: 13,509) at an average selling price of £199,127 (2014: £190,533). Over the last three years Persimmon has increased the volume of new home sales by almost 50%.
Total forward sales at 22nd February 2016, including legal completions so far this year, increased to £1.68bn, 12% stronger than at the same point last year.
Of the 14,572 new homes sold by Persimmon last year, more than 6,000 used the closed-panel timber frame house kits that subsidiary company Space4 makes in its Castle Bromwich factory.
“We have now completed four years of our long term strategy launched in February 2012 and the group's performance is currently significantly ahead of our original expectations,” said chairman Nicholas Wrigley.
Since the launch of the new strategy Persimmon has generated more than £1.28bn, or 420p per share, of free cash before capital returns.
“The performance of the business in 2015 was outstanding,” said chief executive Jeff Fairburn. And he is looking forward to more to come.
“We have experienced an encouraging start to 2016," he said. "Site visitor numbers are 12% stronger than for last year. Customer confidence remains positive and mortgage lenders are supporting customers with attractive mortgage offers. Our weekly private sales rate per site is 13% ahead of last year for the opening period of the new year. The government continues to support home buyers through the Help to Buy initiative and the prospective Starter Home initiative should assist greater numbers of first time buyers to gain access to the market later this year.
“Current global economic headwinds may mean UK growth could prove to be a little more modest than initially projected but subdued inflationary pressures may result in any increase in interest rates being postponed further. We believe the change to banking regulation, and the more recent action taken by the Bank of England to ensure appropriate lending practices are maintained, will result in more sustainable markets moving forward.”
While this is all good news for Persimmon shareholders, it is also good for the UK too as Persimmon is handing over £107.6m to the taxman from its 2015 profits.
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This article was published on 23 Feb 2016 (last updated on 23 Feb 2016).