25th Feb 2014 08:37
LONDON (Alliance News) - Persimmon PLC Tuesday echoed the sentiment of its peers as it cited a recovery in the UK housing market and government mortgage-financing initiatives for driving up profit in its recent full year.
The FTSE 100 housebuilder posted pretax profit of GBP337.1 million for the year ended December 31, 2013 from GBP218.2 million a year earlier, as revenue rose 21% to GBP2.09 billion from GBP1.72 billion in 2012.
Persimmon said legal completions increased 16% to 11,528 during the period from 9,903 the year before, while the average selling price of its properties rose 4% to GBP181,861 from GBP175,640 in 2012. It attributed the 4% increase to a continued gradual change in sales mix, with a greater proportion of larger, more expensive family houses being sold.
All the UK's major housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast of England where Persimmon has high exposure. The builders virtually halted new construction in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
"We responded quickly to the increased customer demand that resulted from improved mortgage lending, the introduction of Help to Buy in April 2013 and the increase in consumer confidence as the UK returned to more meaningful economic growth," Chairman Nicholas Wrigley said in a statement Tuesday.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The second phase, which started in the Autumn, guarantees a portion of a buyer's mortgage.
It comes a day after Bovis Homes said it has been boosted by the contentious scheme, which some critics accuse of creating a house price bubble, as well as other shared equity products.
To date Persimmon has sold over 4,250 new homes to customers who have taken advantage of these schemes, of which 2,203 legally completed in 2013.
Persimmon, however, said it was looking ahead and has continued to invest in the future growth of the business by acquiring 17,735 plots of new land across 130 locations during the year. Overall, 5,765 plots of the 17,735 new plots acquired were successfully converted from the firm's strategic land portfolio and the group now owns and controls 74,407 plots in its forward landbank.
Cash holdings at the year end rose to GBP2304 million, up from GBP201 million a year earlier, "reflecting our focus on delivering superior cash returns through maximising the cash efficiency of our land replacement operations, our trading and our build activities."
Persimmons said it has a strong order book of GBP908 million of sales reserved and contracted for 2014, which should create a strong platform for further sales growth over the next 12 months.
The company plans to return 70 pence in cash to shareholders for each share held on June 4. Last year the firm paid 75 pence per share.
In early trading Tuesday, Persimmon shares were up 1.3% at 1,489.70 pence.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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