February 27, 2018 / 11:47 AM / 22 days ago

Persimmon sees profit rise by a quarter after building more homes

LONDON, Feb 27 (Reuters) - Persimmon, Britain’s second-largest builder, saw its annual profit rise by a quarter as it built more homes and lifted selling prices, sending its shares surging more than 10 percent.

Its results, announced on Tuesday, boosted shares of other British housebuilders, including market leader Barratt and Taylor Wimpey, and helped take the focus off a management bonus plan that Persimmon scaled back after criticism from some shareholders.

Persimmon, which built 6 percent more homes across Britain last year, said its underlying pre-tax profit rose 25 percent to 977 million pounds ($1.4 billion), marginally beating market expectations.

Its average selling price increased by 3.2 percent to 213,321 pounds as first-time buyers continued to take advantage of a government help-to-buy scheme which has boosted the sector.

Shares in the firm were up 9.9 percent at 2735 pence at 1125 GMT as the company said it would boost its capital return plan with a new interim dividend, a move that will help placate shareholders after the row over the incentive plan.

Excessive corporate pay has attracted public anger in Britain since the financial crisis and Persimmon’s scheme would have seen the firm’s top management make a profit of more than 200 million pounds ($268 million) on share options.

The company’s chairman and the head of its pay committee quit last year, under fire from British media and some investors for failing to reform the scheme.

The company said on Friday it would scale back the scheme, reducing the value of the scheme for Chief Executive Jeff Fairburn by around a quarter to 75 million pounds.

Asked whether he thought the cut put an end to the matter, Fairburn told Reuters on Tuesday that it was up to others to make that decision.

“I think that largely depends on others. We’ve made our position clear. We think we’ve come to the right decision and we hope that that will be supported,” he said.

Shares in peer Berkeley were up 2.3 percent, while Barratt shares were 1.6 percent higher and Taylor Wimpey climbed 1.7 percent. ($1 = 0.7166 pounds) (Editing by Susan Fenton)

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