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Persimmon builds £1.1bn annual profits amid Help to Buy subsidy row | Business News

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Persimmon has posted annual profits above £1bn for the first time as the industry faces questions over its practices under the Help to Buy scheme.

The housebuilder said earnings for the 2018 financial year came in at £1.1bn – up from just shy of the £1bn milestone in the previous 12 months.

It also confirmed a story by Sky News that its interim boss, Dave Jenkinson, would take the chief executive role on a permanent basis.

He succeeded Jeff Fairburn who was ousted last year in an attempt to draw a line under a pay row with shareholders over personal awards of £75m.

Jeff Fairburn, chief executive, Persimmon
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Jeff Fairburn was forced out as Persimmon chief executive at the end of last year

The historic bonus scheme spurred allegations that the company’s executive share awards – and profit growth – had been the result of public subsidy under Help to Buy rather than corporate excellence.

The Times reported at the weekend that Persimmon could be stripped of its right to sell properties under the scheme amid allegations of poor building standards and hidden fees.

It said Housing Secretary James Brokenshire was concerned by the FTSE 100 firm’s activities – which includes the sale of properties on leasehold terms, forcing buyers to pay ground rent.

Shares fell 5% by the close on Monday while its listed competitors also saw their market values hit over the renewed scrutiny.

Help to Buy gives first-time buyers of new-build homes, with a 5% deposit, access to a government loan of up to 20% of the purchase price, or 40% if the property is in London.

In its annual results statement, Persimmon said it had continued to focus on delivering properties for the first-time buyer market where demand is at its highest.

It said legal completions in 2018 rose by 406 new homes to 16,449.

Persimmon is among the housebuilders feeling the squeeze on its stocks, amid the continuing political crisis over Brexit
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Persimmon has faced questions over leasehold rather than freehold contracts and complaints over build quality

They had an average selling price of £215,563 – a rise of 1% on 2017 – but almost triple the sum achieved in 2012.

Persimmon has been dogged by complaints about poor build quality among Help to Buy customers – with satisfaction rates remaining below its 4-star target of 80%.

The company’s chairman said in the results statement that it was being addressed.

Roger Devlin said: “Persimmon is changing. In his short time as interim CEO Dave Jenkinson has introduced new approaches to customer satisfaction and colleague engagement, whilst also ensuring that the group delivered another year of growth.

“These changes are illustrative of wider efforts across the group to evolve our processes and practices to pursue excellence across all aspects of our business.

“Achieving further progress with these initiatives will be a key priority for Dave in his new post as CEO.”

The company confirmed there would be no increase pay for Mr Jenkinson – formerly managing director before his interim appointment – and said he would not take a bonus this year pending a new deal for 2020 which would be agreed following a shareholder consultation.

Persimmon presented a stable outlook for sales and shares recovered some of the ground lost on Monday – rising more than 2% in early deals.

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