Pay row Persimmon says revenue up 9% to £3.4bn

Jeff Fairburn

York-based house builder Persimmon plc said 2017 revenues rose 9% to £3.42 billion and its average selling price increased by 3% to £213,300.

We anticipate our pre-tax profits for the year will be modestly ahead of market consensus …” said Persimmon in a trading update ahead of its final results.

“We continued to experience healthy customer demand for new homes through the autumn sales season and the value of our forward sales at 31 December 2017 of c. £1,355m was 10% ahead of the prior year (2016: £1,234m).

“Second half legal completion volumes of 8,249 were 455 stronger than for the first half of the year (H1: 7,794), an increase of 6%.”

Last month, Persimmon said its chairman Nicholas Wrigley would resign and remuneration committee chair Jonathan Davie had resigned amid a row over excessive executive pay at the firm.

Shareholders expressed concern about Persimmon’s long-term incentive plan introduced in 2012, which could see the firm’s management share up to £500 million depending on profit and housebuilding targets — with CEO Jeff Fairburn in line for the biggest payout of more than £100 million.

Fairburn defended the plan on Tuesday.

“This was a scheme that was launched at a time where the business was looking to move forward, there were stretching targets,” he told Reuters.

“Nobody has yet exercised any of those share options.

“From my own perspective, I have not made a decision and I’ll continue to review that.”

In its trading update, Persimmon added: “We have made excellent progress in expanding our manufacturing capabilities to support our desire to achieve sustainable growth.  

“Our new brick manufacturing plant in Harworth, near Doncaster, is now complete and deliveries of bricks to site have commenced, underpinning our ability to increase house building volumes.

“The group’s Space4 insulated frame build-system is also an important contributor to our overall construction capacity and we anticipate further investment in expanding this capability over the coming years.

“We continue to invest for future growth and have acquired c. 17,300 plots of new land at excellent margins in over 80 locations throughout the UK during the year.

“We remain mindful of market risks including those associated with the uncertainty arising from the UK leaving the EU.

“However, we are keen to deliver further improvement in our housing output and remain ready to invest wherever the local planning environment is supportive.

“The group continues to perform strongly in generating free cash and held cash balances of c. £1,300m at 31 December 2017 (2016: £913m).”