Profits up as volume and price give boost for builder
Persimmon in investor handout
HOUSEBUILDER Persimmon has lifted underlying profits by a quarter to £783 million, as it completed 1,700 homes in Scotland, up seven per cent on the previous year.
The average selling price north of the Border was £170,000, up about three per cent, giving the UK’s second biggest housebuilder revenue in Scotland of about £290m.
Finance director Mike Killoran said the group would remain committed to Scotland, even in the event of the electorate voting for independence in any future poll.
“Regardless of whether a referendum will take place, or even if it does, the outcome, we will remain keen to participate in the Scottish market,” he said.
“We have always been keen to operate north of the Border, it’s one of the essential legs to our business, so as long as new housing is needed, we will seek to provide our share of that.”
Overall, Persimmon saw an eight per cent rise in revenue to £3.14 billion as completions increased by 599 homes to 15,171 at an average selling price up 3.8 per cent to £206,765.
Shares closed yesterday up 0.25 per cent to 2,030p, just 3.3 per cent behind the closing price ahead of the Brexit vote, which saw housebuilders fall by around 35 per cent. The group also revealed it had boosted its capital return plan.
Mr Killoran said: “We are pleased with the share price, it’s the result of the hard work that everyone is putting into the business, including the supply chain and our sub-contractors. There is opportunity to continue to grow.”
Persimmon has increased its output by 60 per cent over the last five years, and Mr Killoran said the entire industry had the chance to contribute to ensure local communities have the housing they need.
The group has planning consent for about 52,800 plots, with 18,000 plots progressing towards consent. A further 26,400 plots are in the group’s strategic land banks.
In Scotland, the group has around four-and-a-half years’ worth of output with detailed planning consent, and while Mr Killoran said the planning system was supportive he added that “it just takes far too long” to be granted consent.
Persimmon currently has 38 developments in Scotland, mainly in the central belt, and opened a Perth office last year, which Mr Killoran said had directly led to nearly 400 new homes.
The group has also returned to the north east, with a 63-plot site in Aberdeen.
“We’ve got more of a critical mass further north [since Perth opened],” said Mr Killoran. “The backdrop to the oil and gas industry has been challenging but it looks to have stabilised to a degree.”
Demand for its high-profile development on Cowglen Road in the south side of Glasgow was in line with expectations and Mr Killoran said he expected that to pick up in the spring.
The threshold for participation in Scotland’s help to buy scheme reduces in April, to £200,000 from £230,000 before further reducing to £175,000 in April 2019, but Mr Killoran said Persimmon “consciously offers a wide range of prices with an emphasis on firstbuyer and first-time mover so that reduction isn’t, by design, going to present much of a challenge for us”.
Persimmon also announced it had completed the fifth year of a 10-year strategic plan to deliver £1.9bn of surplus capital to help mitigate against risk to sustainable shareholder value.
The group accelerated payments last year and has revealed a further increase of 25p per share, which will be paid on March 31 as an interim dividend, ahead of a payment of 110p on July 3.
As a result of these payments the Capital Return Plan to 2021 has now been increased by 49 per cent to £9.25 per share. THE man set to take charge at Wright, Johnston & Mackenzie LLP has said the law firm can thrive as an independent focused on Scotland and is capable of doubling turnover in the next three years.
Fraser Gillies, WJM’s managing partner designate, said moves by bigger rivals to focus on the top end of the market have left a gap which the firm can fill with a focus on the Glasgow, Edinburgh and Inverness areas. “There are still good opportunities in that part of the market we focus on,” he said. “Wealthy individuals, smaller corporates, SMEs; there’s a lot of quality work to be done.”
Mr Gillies, who will succeed Liam Entwistle on April 1, said the firm will continue to major on the renewables, telecommunications, healthcare and family business sectors.
The planning specialist reckons WJM could increase turnover to at least £15 million in the next three years, compared with £7m in the year to March 2016.
He said the firm had been making good progress after investing heavily in providing the kind of relationship-based service that clients increasingly demand.
It is on course to grow sales to more than £8m in the current year and to deliver a higher profit than the £2m achieved last time.
The firm has felt the benefit of the merger it agreed in October 2015 with Inverness-based MacArthur & Co, whose four partners joined WJM.
In August 2015, it recruited four staff from McLure Naismith after that firm went into administration.
Mr Gillies said the firm had no interest in being taken over by a bigger business. It will consider merging with smaller firms but is not in talks about any deals.
WJM may use lateral hires to help boost growth.
It has 23 partners and 49 fee earners.
Mr Entwistle will return to focusing on dispute resolution after three-and-a-half years as managing partner, during which the firm has grown revenues by over 15 per cent.
He said: “It’s been personally very rewarding, however the time is right, in terms of my own personal journey, to hand over the reins.”
In December Mr Entwistle predicted there would be more consolidation in the legal sector as the economic issues caused by the Brexit vote impacted on the profession.
Mr Gillies joined WJM as a trainee in 2000 and qualified in 2002. He was promoted to partner in2010.
He has advised clients involved in retail, housing, infrastructure and energy developments throughout the UK.