Persimmon reveals �1.9bn cash hand-back for shareholders as profits rise 55%

HOUSEBUILDER Persimmon highlighted its “excellent prospects” today by setting aside �1.9billion for shareholders over the next decade.

In a surprise move which prompted its shares to jump 12%, Persimmon revealed plans to return surplus capital through dividend payments between 2013 and 2021.

The move follows a strategic review under which Persimmon anticipates it will finish the �1.9bn programme with a greater level of sales, enhanced margins and the “same robust capabilities that it holds today”.

Persimmon, which also operates under the Charles Church and Westbury brands, generated �119million in cash last year, while underlying profits rose 55% to �148.1m.

It held �41m of cash at the end of 2011, compared with borrowings of �51m a year earlier, and said it continued to invest in land after acquiring 32,000 plots worth �1bn over the last four years.

The company said: “Whilst we expect the UK housing market to remain challenging, with the constrained supply of mortgage credit continuing, the group is in a strong position to deliver further improvements in returns for shareholders.”

Persimmon, whose current developments include sites in Ipswich, Colchester, Hadleigh, Braintree, Great Cornard, Mildenhall, Diss and Rendlesham, said the encouraging sales trends first noted in the autumn had continued into 2012, with sales per site up 22% in the first eight weeks.

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Andrew Fuller, managing director of the group’s regional arm Persimmon Homes Anglia, said: “Persimmon’s strategy has been to deliver improving operating margins, invest in high quality land, increase profitability and generate surplus cash to pay down debt. This has proved very successful on all measures.

“Today’s long-term capital return announcement supports the development of the Group into a stronger, larger business over the next decade, enabling us to continue to deliver quality homes into the local community.”

Mr Fuller added: “We opened six new developments in 2011 and are already looking forward to unveiling six more sites in the first half of this year – including in Norwich, Wymondham, Hoveton and Ipswich with more planned for later in 2012.

“Early indications for 2012 are promising, judging by the phenomenal interest we saw when we launched our Wentworth Green development in Norwich in January.”