Persimmon updates on Capital return plan

DividendMax Ltd.

Persimmon updates on Capital return plan


Underlying profit before tax increased by 49% to £330m (2012: £222m)

Full year revenue up 21% to £2.1bn (2012: £1.7bn)

Legal completions increased by 16% to 11,528 (2012: 9,903) and average selling price increased 4% to £181,861 (2012: £175,640)

Operating margin increased to 16.0% (2012: 12.9%); with second half improvement to 16.6%

Return on average capital employed increased by 44% to 17.6% (2012: 12.2%)

A further 17,735 plots of land acquired in the year bringing consented landbank to 74,407 representing 6.5 years supply

Continued focus on the development of strategic land with 33% of replacement land successfully converted from the Group's strategic land portfolio

Underlying basic earnings per share increased by 47% to 83.3p (2012: 56.7p**)

Net cash of £204m at 31 December 2013 (2012: £201m cash)

Forward sales strongly ahead at over £1.4bn (2013: £1.0bn), an increase of 41%

Capital Return Plan

First instalment of £228m (75p per share) under the Capital Return Plan paid 28 June 2013

Success in meeting increased demand and growing the business has generated £231m of free cash before capital return payment and enabled an acceleration of the Capital Return Plan

‐ 70p per share to be paid on 4 July 2014, being a part acceleration of the final planned payment of 115p per share in 2021

‐ Planned 95p per share payment for 2015 reinstated in full

‐ Payments of at least 10p per share to be made in both 2016 and 2018, part accelerated from the final planned payment for 2021.

Nicholas Wrigley, Group Chairman, said: "Persimmon achieved a strong result for the year as we responded quickly to the increased customer demand that resulted from improved mortgage lending, the introduction of Help to Buy in April 2013 and the increase in consumer confidence as the UK returned to more meaningful economic growth. Our success in increasing build rates significantly in response, with second half volumes 30% ahead of those in the first six months, underpinned a robust overall performance. 

"2013 was a year of excellent progress against our strategic plan and the strong growth of the business has underpinned an acceleration of the Capital Return Plan.

"The Group entered 2014 with a very strong forward order book and the early weeks of the spring selling season have been encouraging, with our weekly private sales rate per site being 22% ahead of last year for the first eight weeks. We anticipate a further year of encouraging sales growth in 2014."

Long term strategy and Capital Return Plan

The results for the year ended 31 December 2013 represent the delivery of the second year of our original nine-and-a-half year strategic plan launched in February 2012 and reflect significant progress against the original plan.

We remain determined to build Persimmon into a stronger, larger business over the long term, investing the appropriate level of capital in the asset platform to sustain the Group at its future larger scale. We remain committed to achieving this whilst maintaining the quality of our land replacement and minimising financial risk. This strategy is designed to deliver strong free cash generation through the housing cycle for the benefit of all our shareholders.

The strategic plan announced in February 2012 included a commitment to return £1.9 billion (£6.20 per share) of surplus capital to shareholders over nine-and-a-half years. On 28 June 2013 we paid £228m to shareholders representing the first instalment under the Capital Return Plan of 75p per share. As a result of the strong progress the Group has made, and against the backdrop of an improving housing market, the Board is recommending that the original Capital Return Plan schedule be accelerated. 

At the AGM in April 2013, the Board indicated a payment of 10p per share would be accelerated into 2014 from the planned payment in 2015 (originally 95p per share). The Directors now plan to return 70p per share in 2014 and, rather than this payment being accelerated from the scheduled payment for 2015, it is to be a part acceleration of the 115p final planned payment due in 2021. In addition the original planned payment of 95p per share in 2015 is to be reinstated in full. 

Following consultation with shareholders, the Board has also determined to make capital return payments of at least 10p per share in both 2016 and 2018, years in which a payment was not originally planned. These two new payments will be a further part acceleration of the 115p final planned payment due in 2021.  The Board will determine the final value of these further instalments of the Capital Return Plan at the appropriate date, in light of the future progress of the business.

The capital return for 2014 of 70p per share will be made on Friday 4 July 2014. The Directors propose to offer shareholders the opportunity (wherever possible) to choose whether to receive the cash either as a return of capital or as dividend income by way of a B share/C share scheme in line with the process for the payment made in 2013. Full details of the B/C share proposal will be sent to shareholders, along with the AGM notice, on Monday 17 March 2014.

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