North East housebuilder Persimmon plc has grow underlying profit before tax by 44% as the boom in housebuilding continues.
The company, which is three years in to a nine-and-a-half year strategic growth plan, boosted profits from £330m in 2013 to £475m in the year ended December 31, 2014. Full year results for the period also show revenue rose 23%, from £2.1bn to £2.6bn.
Persimmon’s long-term plan centres on building a stronger, larger business based on disciplined investment in land and site development works at a time and scale that optimises both trading efficiencies and land replacement activities while minimising financial risks.
During 2014, it acquired a further 26,822 plots of land, with 9,386 successfully converted from the group’s strategic land portfolio. Legal completions likewise grew by 17% to 13,509 as the average selling price rose from £180,941 to £190,533.
Underlying basic earnings per share, meanwhile, soared by 49% to 124.5p while the group’s net cash on December 31 stood at £378m, compared to £204m in 2013.
Group chairman Nicholas Wrigley said: “Persimmon delivered a strong and well balanced performance in 2014.
“We have undertaken disciplined investment to support sustainable growth in volume, increasing the number of completions by 17% in the year, bringing the increase in the number of new Persimmon homes completed over the last two years to 36%.
“We have had an encouraging start to 2015 and experienced a solid opening period to the spring season with current total forward sales of £1,490m, 5% ahead of the previous year.
“Despite some uncertainty arising from the General Election in May, the ongoing gradual improvement in the UK economy and increasing mortgage lender support provides a supportive backdrop for the new homes market.”
New Persimmon sites to open this year in the North East include developments in Wallsend, Bedlington, Cramlington and Amble. Further phases of new housing will also be built at Newcastle Great Park and at Westerhope.
The latest results will mean good news for shareholders, with Persimmon committing yesterday to delivering £1.9bn of surplus capital to them.
To date, it has returned £442m - or 145p per share - through two payment instalments and, given the current positive momentum, has decided to speed the process on further.
Mr Wrigley said: “Planning to minimise financial risk and retaining flexibility for reinvestment in the business remains a priority for management at this point in the cycle.
“However, the combination of particularly strong trading in 2014, together with good capital discipline, resulted in total shareholder equity value per share (pre-capital returns) generated for the year of 118 pence, an increase of 28% over the value generated last year.
“As a result, the directors now intend to return 95p per share in early April 2015, accelerating in full the payment of 95p per share previously scheduled for early July 2015.”
Persimmon’s good results follow similar growth at fellow housebuildings including Barratt and Bellway.