Persimmon has spring in its step as sales boom

Pre-tax profit increases to £977m

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 newbuild 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.”

Following the furore over the bonus scheme, directors agreed to forgo around £50m in bonuses last week.

Mr Fairburn’s near-£100m award has been cut by £25m 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.”

Mr 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 has 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 the group’s average selling price increased 3 per cent to £213,300.

Persimmon has been helped by surging demand thanks to the Help to Buy initiative.

Making sure people have the confidence to buy is important. Jeff Fairburn, chief executive of Persimmon