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Boost for Persimmon's profits and performance
PERSIMMON has increased profits and outperformed its expectations as it embarks on a new long-term strategy.
The York-based housebuilder increased pre-tax profit to £221.8 million in the year ended December 31, up from £147.2 million in 2011.
Revenue was up 12 per cent to £1.72 billion and the business opened 125 new sites throughout the year.
The growth in the company’s profitability was driven by the opening of new sites and continued focus on operational improvement, which resulted in strong control over build costs, it said.
Persimmon has already opened 45 new sites out of 90 which it expects to open in the first six months of this year, and customer interest in 2013 has been at an all-time high.
Mike Farley, group chief executive, said it welcomed two new Government initiatives, the FirstBuy shared equity scheme for first-time buyers and the NewBuy five per cent deposit mortgage scheme for the new home market, which supported customers to buy homes.
The Government’s £80 billion Funding For Lending is also expected help mortgage lenders increase lending at more attractive interest rates.
Although the scheme got off to a slow start at the end of 2012, Mr Farley said: “We anticipate this scheme will support a further gradual improvement in the mortgage market through 2013, mitigating to some extent the impact of the continuing uncertain economic conditions.”
Nicholas Wrigley, group chairman, said: “These strong results mark the completion of the first year of our new strategy and I’m pleased that at this early stage we are ahead of plan.
“Persimmon has made excellent progress throughout the year, increasing underlying pre-tax profitability by 52 per cent, growing operating margins strongly to 13 per cent and generating £179 million of free cash flow before dividends. We continue to see good value in the land market and acquired about 14,800 plots during the year, 38 per cent of which were converted from our own strategic land bank.”
The business will pay a dividend of 75p per share on June 28, which amounts to about £227 million, as the first payment in its long-term capital plan to return £1.9 billion to shareholders by 2021.