Stellar results cheer Persimmon shareholders

Persimmon's CEO Jeff Fairburn

Shares in housebuilder Persimmon jumped 5 per cent after the group announced another set of stellar results.

The York-based firm, which has come under fire for a controversial multi-million pound bonus for its directors, is enjoying booming demand for its new homes. The group's underlying pre-tax profit rose 25 per cent to £977m in the year to December 31.

Yorkshire's biggest PLC described the results as outstanding and said the start to the spring sales season in 2018 has been encouraging and private sales are up 7 per cent on last year.

However, chief executive Jeff Fairburn sounded a note of caution over Brexit.

"Whilst conditions in the new-build housing market remain supportive, the negotiations associated with the UK's exit from the EU, including both the transitional arrangements and the terms of the longer term relationship, together with the nature of UK's trading relationships with its other global partners, present key uncertainties that will have a substantial influence on market outcomes," he said.

Mr Fairburn said the main worry is over jobs.

"If the economy continues to function well and people keep their jobs, they'll be keen to buy new homes," he said.

"In the UK there is an underlying demand for housing. Making sure people have the confidence to buy is important."

F​ollowing the furore over the bonus scheme, ​​directors agree​d​ to ​forgo around £50​m in bonuses​ last week.​

​Mr ​Fairburn's near-£100​m award ​has been cut ​by £25​m following mounting pressure from politicians and some shareholders over the long-term incentive plan introduced by the company six years ago​. Angry investors have said the group has been boosted by the Government's Help to Buy scheme.

​The pay controversy led to the resignation of chairman Nicholas Wrigley and remuneration committee chairman Jonathan Davie late last year. ​

​Mr Fairburn said: "We've listened to what people have said. The executive team have taken various steps to deal with the matter​​​ and we came to the conclusion we needed to waive some of the entitlement. I'm pleased it was accepted by the board.

"I've waived 30 per cent of my entitlement and we hope that's supported."​

M​r Fairburn plans to donate a sizeable chunk of his award to charity through a private charitable trust.

"I'm sure some of the charities will be Yorkshire-based," he said.

"We very much have Yorkshire at heart. My wife and I are both from Yorkshire."

Newly appointed acting chairman Nigel Mills, who took on the role on an interim basis on Monday after ​Mr Wrigley stepped down, said the start of the 2018 spring season ha​s ​ been encouraging, with the group's private sales rate per site up 7​ per cent​ and average selling prices 2​ per cent​ ahead at £234,106​ this year​​.

In 2017 t​he group's average selling price increased 3​ per cent​ to £213,300.

Persimmon has been helped in recent years by surging demand thanks to the Help to Buy initiative, which allows first-time buyers to purchase new-build properties with deposits of just 5​ per cent​.

​The group announced​ it will bump up its dividend payouts following the profits ​improvement, and pledged to pay out an additional 125p a share for the next three years, boosting the value of its long-term dividend programme to £13 a share by 2021.

Laith Khalaf, ​s​enior ​a​nalyst​ at​ Hargreaves Lansdown​, said​:​ "​Persimmon is selling more houses at higher prices, and quite simply that spells increased profits for the company. ​

"​The housebuilder is doing so well it’s sending a wall of cash back to shareholders in the form of special dividends, with £2.35 per share being paid in the next ​five​ months alone. No surprise then to see the market roar its approval in early morning trading.

​"​The success of the housebuilding sector has been built on a favourable economic environment of low interest rates coupled with the government’s Help to Buy scheme. While the Help to Buy scheme is due to run until at least 2021, borrowing costs are set to rise as the Bank of England cranks the handle of interest rate rises.

​"​Monetary policy is likely to tighten slowly, and with due regard to the health of the consumer and the housing market. So although conditions may not be as rosy looking forward for the housebuilders, they are still set pretty fair.​"​

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