Rise in Scottish house prices helps profits jump at Persimmon

PERSIMMON has seen its average selling price for a home in Scotland edge up to nearly £190,000 as profits increased by nearly 40 per cent in its latest financial year.

The housebuilder booked pre-tax profits of £467 million in the year ended December 31, boosted by a rise in legal completions on homes north of the Border.

Persimmon completed sales on about 1,500 new homes in Scotland last year, up from 1,100 in 2013.

The full-year results made good on guidance issued by Persimmon at the start of the year, with chief finance officer Mike Killoran highlighting progress on “top line growth”, margin improvement, cash generation and return on capital deployed of nearly 25 per cent – a “key feature” of its performance.

Revenue grew by 23 per cent to £2.6 billion, the company reported.

Mr Killoran said the Help to Buy Scheme had provided a stimulus to its UK performance and featured in 40 per cent of its sales over the year. That figure is broadly the same in Scotland as the UK as a whole, Mr Killoran noted.

He said: “It’s an important feature of the market. What it has done is provide more certainty in these uncertain times. Extending the scheme out to 2020 was a good move for the industry, because it provides a more certain backdrop for the investments we are making.

“And indeed for the customer it gives them more support for longer. It gives them more confidence that the market is going to continue [to grow].”

Mr Killoran confirmed Persimmon was now tapping into Help to Buy funding for the next financial year, which begins in April, to sell homes in Scotland. And he noted that the current financial year had started well, with sales currently running five per cent ahead of last year.

As well as Help to Buy, changes in stamp duty on both sides of the Border are helping to maintain the momentum in the market. Mr Killoran said the adjustments are helping home buyers at the lower price point by reducing transaction fees. But he added: “Without a doubt, given employment rates have improved, and we have seen very low inflation rates with what has happened to the price of oil and the grocery situation, that is all putting money into people’s pockets.

“I know up in Aberdeen it has unsettled the market to some degree, but it has rebounded a little bit since the low. I think that will help to bring confidence down. In the central belt we have seen a very good market [and] in the early weeks of the new year that hasn’t changed in our experience.”

Persimmon, which runs housebuilding operations in the east and west of Scotland, highlighted its success in bringing homes from its Greendykes site in Edinburgh to the market. It is building or bringing work on stream at new sites in Dunfermline, Falkirk, Aberdeen, Cambuslang and Ardrossan.

Mr Killoran said: “We continue to invest quite strongly in the Scottish market. We like the Scottish market. Our budgets are to do a similar amount of volume [this year]. If you think each of our businesses is doing over 700 units, they are quite sizeable. And we’ve got good visibility over new sites opening in the new year.”

Yesterday shares in Persimmon closed down 60p or 3.5 per cent at 1650p.