Strong trading combined with strict capital discipline has left house builder Persimmon (PSN) awash with cash. It now plans to pay the riches out to shareholders earlier than planned.
The 95p dividend payment originally scheduled for July has been brought forward to April following a year in which underlying operating profit soared 42 per cent to £473m and the net cash pile ballooned by £174m. In fact, Persimmon generated £388m of free cash before capital returns, despite acquiring 26,822 new plots of land, while its return on capital employed - a key metric for house builders - rose to 24.6 per cent from 17.6 per cent.
Cheap mortgage deals, the government’s Help to Buy scheme and the recovering UK economy were instrumental to Persimmon's success last year. New home completions grew 17 per cent to 13,509 and selling prices improved. Meanwhile, the company kept a tight lid on development costs, resulting in a 240 basis point increase in the underlying operating margin to 18.4 per cent. The new year has started well, too, with sales in the first eight weeks running 5 per cent ahead of last year.
Numis Securities expects pre-tax profit of £575m for the full year, giving EPS of 150p, up from £475m and 124p in 2014.
| PERSIMMON (PSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,657p | MARKET VALUE: | £5.1bn | |
| TOUCH: | 1,656-1,659p | 12-MONTH HIGH: | 1,718p | LOW: 1,176p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 715p | NET CASH: | £378m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.6 | 96 | 24.8 | 7.5 |
| 2011 | 1.5 | 147 | 36.1 | 10 |
| 2012 | 1.7 | 218 | 55.4 | 75 |
| 2013 | 2.1 | 337 | 84.7 | 70 |
| 2014 | 2.6 | 467 | 121.8 | 95 |
| % change | +23 | +39 | +44 | +36 |
Ex-div: 18 Mar Payment: 2 Apr | ||||
