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Persimmon aims to build 15,000 new homes a year

Persimmon has highlighted its potential to deliver up to 15,000 new homes each year from 2014, as it posted a 50 per cent rise in it profits before tax in the year to 31 December 2013.

Speaking to Construction News, Persimmon financial director Mike Killoran said the group’s 24 operational business had the ability to increase capacity by 30 per cent, delivering between 14,000 and 15,000 new homes a year, compared to the 11,528 legal completions it delivered in 2013.

Legal completions rose by 16 per cent to 11,528 in 2013 compared to 9,903 for the same period in 2012, with an average selling price increase of 4 per cent to £181,861 – up from £175,640 the year before.

Mr Killoran said the group was also considering the creation of several additional satellite offices to open as early as 2014 to help with possible market expansion in the South-west and outside the M25 area, but stressed this would not happen at the expense of the group’s existing capacity.

He added that the group had no present ambitions to enter the London market.

Persimmon will be open to future hires during 2014, including senior management roles.

Mr Killoran said that while the group was not actively seeking to fill specific positions, Persimmon was “always looking for new people” to help with its business development.

The group’s apprenticeships and training programme will continue to play a role in the company’s future hires, Mr Killoran added.

Persimmon trained 400 young people during 2013, which the company hopes to “progressively build upon during 2014”, although Mr Killoran would not commit to an exact figure.

He said that the younger generation’s appetite to get involved in the construction industry was growing and that he was impressed with the quality of work he had seen to date.

However he expressed disappointment with the number of trainees that remained with the business post-training but added that he was not surprised given the length of the programme lasting up to three years, coupled with “itchy feet” among younger generations.

Persimmon pre-tax profit stood at £323m for 2013, compared to £215.4m for the same period in 2012.

With exceptional items taken into account, pre-tax profit was £337m for 2013 compared, to £218.2m for the same period in 2012.

Exceptional items included a change in land values and predictions on future sales.

The group said increased demand and a growing business had generated £231m in shareholder returns, enabling the group to accelerate paybacks.

The first shareholder instalment of 75p per share was paid on 28 June 2013, with the next instalment of 70p per share planned for 4 July 2014 – one of three additional instalments within its original payback schedule.

Asked whether this acceleration would result a cap on land investments, Mr Killoran disagreed and said the group had brought through over 17,000 new plots into its landbank in 2013, at the same time as delivering shareholder returns.

Persimmon’s landbank now stands at 74,407 plots, representing 6.5 years of supply, after it acquired 17,735 additional plots in 2013.   

The group will continue its focus on the development of strategic land with 33 per cent of replacement land converted from its strategic land portfolio.

The financial director echoed concerns felt by housebuilders including Bovis Homes and Crest Nicholson over material and labour constraints, however he said this was something he saw improving throughout 2014.

Mr Killoran said that the group was looking to ramp up its timber frame output through its Space4 timber frame operation to 5,000 units in 2014, compared to 4,200 timber frame kits delivered in 2013.

He said that this had proven advantages for the team including cutting down build times and added that he was surprised to hear Taylor Wimpey had shut its timber frame company, Prestoplan, last month.

Return on average capital employed (earnings before interest and tax/capital employed) rose by 44 per cent to 17.6 per cent in 2013, compared with 12.2 per cent in 2012.

Forward sales stood at £1.4bn on 24 February 2014, compared with £1bn in the year to 31 December 2013, representing a 41 per cent increase.

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