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Persimmon hails fast demand response as profits increase 50%

PERSIMMON has hailed its quick response to rising demand for homes around the UK as it posted a near 50% rise in profits to £330 million last year, before exceptional items.

POSTING: Persimmon chief executive Jeff Fairburn has led the company to post a near 50% rise in profits.
POSTING: Persimmon chief executive Jeff Fairburn has led the company to post a near 50% rise in profits.

The housebuilder, led by chief executive Jeff Fairburn, said its results had been driven by a 30% increase in mortgage approvals, the impact of Help to Buy shared equity schemes, and rising consumer confidence on the back of improving economic data. Persimmon said these factors helped it hike turnover by 21% to £2.1 billion, with its average selling price up by 4% to £181,861 and legal completions rising by 16% to 11,528.

Finance director Mike Killoran said: "Those three elements put some good support behind the market, which we were able to respond to quite quickly in terms of increasing our build rate. And that allowed us to deliver a 30% increase in volume of legal completions in the second half of the year compared with the first half."

Mr Killoran noted 2013 had been positive for Persimmon's Scottish business.

The division, Scotland's largest housebuilding operation, built 25% more homes in 2013 than it did the previous year, with its tally reaching 1100.

And it plans to continue in a similar vein this year. The company plans to bring 17 new sites on stream in Scotland this year, in locations such as Perth and the Glasgow areas of Newton Mearns and Baillieston.

Mr Killoran said: "I think the Scottish market was good for us in 2013. [Given] the fact Help to Buy was not introduced until really quite late on in 2013, I think the Scottish market performed pretty well.

"For us, we have always been keen to offer the right product mix on our sites, which might mean changing the mix from time to time, [and] re-planning different phases of a site to continually reflect what customers are looking for. Scotland is no different on that.

"We did deliver more than 900 units in the central belt of Scotland in 2013, which was 25% up on the prior year, with an average selling price of around £160,000. [It] represents a good market for us."

Persimmon noted the progress it made in 2013 on the capital return plan it instigated in early 2012. The strategy has the dual aim of growing the business over the next nine to 10 years while returning around £1.9bn of surplus share capital to shareholders.

Mr Killoran said improving market conditions had allowed Persimmon to accelerate the plan. Shareholders will be paid 70p per share on July 4, brought forward from the final planned payment of 115p scheduled for 2021. Persimmon previously stated there would be no instalment paid this year.

Mr Killoran said he was satisfied house prices were stable, but questioned price sustainability in parts of London. Persimmon does not build in central London. Shares closed down 8p at 1463p.

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