23rd Feb 2016 11:19
LONDON (Alliance News) - Persimmon PLC shares pushed higher on Tuesday after the company posted a huge, consensus-beating rise in pretax profit and increased its capital return programme significantly, following a very strong year for the UK housebuilding industry.
Shares in the group were up 3.7% in to 2,045.00 pence on Tuesday late morning, the best performer in the FTSE 100.
Persimmon said its pretax profit for the year to the end of December was GBP637.8 million, up from GBP475.0 million a year earlier, ahead of the GBP605.9 million consensus estimate compiled by Morningstar and the GBP602.0 million predicted by Shore Capital.
The share price rise was also driven by Persimmon's decision to further accelerate its capital return programme, as the performance of the business since the programme was put in place in 2012 has been significantly ahead of its expectations. The company will now return 110.0 pence per share in cash to shareholders by the start of April, a massive rise on the 10.0p it had been intending to return under its original plans.
The total value of its capital return programme has been increased 45% to GBP2.76 billion, up from the GBP1.90 billion it had outlined back in 2012. Cash generation for the group, pre-capital returns, rose to GBP483.0 million in the year, up from GBP388.0 million.
This will leave 550p per share to be paid over the last five years of the capital return plan to 2021. Persimmon is currently intended to deliver this value in equal instalments over the remaining five years of the plan period commencing in 2017.
The housebuilder also pointed to the rise total revenue for the year to GBP2.9 billion from GBP2.6 billion, which was due to larger volume of properties sold at higher prices.
Persimmon sold 14,572 homes in 2015, up 8.0% from 13,509 in 2014, and sold those homes for an average of GBP199,127, up from GBP190,533. Its operating margin for the year improved to 21.9%, up from 18.4%, thanks to the higher prices, and this accelerated further in the second half, hitting 23%.
Its Shires market outperformed all other areas, securing the highest average selling price for the company of GBP268,663, up from GBP249,959, with the largest number of completions at 1,632, whilst the North West proved the weakest region.
Forward sales for the group at the close of the year stood at GBP1.68 billion, up 12% from the GBP1.49 billion it had on its books at the end of 2014.
In its full year results, Persimmon said it acquired 20,501 plots of new land during the year, bringing its land bank to 54,300 plots. It added this was part of its strategy to focus on mitigating the risks to sustainable shareholder value creation, saying it would be making "significant new investment" in land during 2016.
"Persimmon delivered an outstanding performance in 2015, supported by improving customer sentiment and a mortgage market which is responding to customer demand," said Chairman Nicholas Wrigley, who added customer activity in the early weeks of 2016 had also been "encouraging".
By Hannah Boland; [email protected]; @Hannaheboland. Additional reporting by Sam Unsted; [email protected]; @SamUAtAlliance
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