Persimmon reported annual pretax profits of £1.1bn, a 13% surge on last year, in its annual results for 2018.
The UK’s second-largest housebuilder attributed strong performance to demand from the first time buyer and first time mover markets.
Interim group chief executive Dave Jenkinson, the former finance director, has been appointed full-time chief executive.
Help to Buy
It comes after the company shares fell almost 6% after reports that the government’s lucrative Help to Buy contract was being reviewed.
During 2018, Persimmon delivered 7,970 homes to customers under Help to Buy. This was a 3.6% increase on the previous year, making up 48% of the 16,449 homes delivered for the year.
In the results Persimmon said: “These schemes provide customers with greater access to the housing market as it enables them to buy a home with a lower deposit and at lower interest rates than many other mortgage options.”
Housing delivery
Home delivery was up by 2.5%, with an additional 409 new homes in 2018. The average selling price of £215,563 was 1% year on year.
The average selling price of private sales within the businesses total sales is £238,800, circa 2% higher than at the same point last year.
Persimmon, however, also reported average private sales rate per site in the first eight weeks of 2019, but it still expects to deliver a similar level of legal completions to 2018 this year due to its more than £2bn total forward sales position.
The group has around 4,800 new homes forward sold to its housing association partners, 9% stronger than at the same point last year.
Persimmon said it had delivered a housing operating margin of 30.5% in 2018 which was 260 basis points higher than the 27.9% in 2017 and operating profit of £1.2bn was 13% ahead of the £955m in 2017.
Additionally revenues for the year ended 31 December 2018 increased by 4% to £3.7bn, up from £3.6bn the previous year and basic earnings per share of 283.3p were also 11% higher than last year’s 255p.
New chief executive
Persimmon has also made interim chief executive Dave Jenkinson its permanent boss with immediate effect.
Jenkinson was appointed interim chief executive in November after the departure of Jeff Fairburn, following controversy over his £75m pay package. Jenkinson will not receive any annual bonus in 2019 and will not receive an award under the group’s 2017 share performance plan.
His remuneration package will remain the same, and will be updated on 1 January 2020, after shareholder consultation.
Jenkinson has worked at Persimmon for 22 years.
Dave Jenkinson, group chief executive, said: “Our results for 2018 reflect our successful focus on offering attractively priced new homes primarily to the first time buyer and first time mover markets, where housing need is greatest.
“This strategy has enabled Persimmon to grow its construction volumes by more than 75% since 2012, making a significant contribution to UK housing supply.
“My focus is to build on this strong platform, maintaining our operational momentum, but also implementing a number of necessary new initiatives in customer care.”
“Whilst the sales outlook remains subject to a degree of uncertainty at the start of any financial year, at this point the group’s sales are in line with management’s expectations.
“Given our strong prior year comparatives, the current increased uncertainties with respect to the future performance of the UK economy and the planned later sales releases in the early part of the year, we are encouraged by the levels of customer interest across the UK. Including legal completions taken so far in 2019, the group has a strong forward sales position at £2.02bn and we currently anticipate delivering a similar level of legal completions during 2019 as in the prior year.”
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