Persimmon recently announced that over the next 10 years they are going to be giving back £1.9 billion to investors.
This caused the share price of this British house builder to increase by around 20 percent.
Over the next decade, the company are going to pay over six pounds for every share and this is going to begin in 2013 with a payment of 75 pence per share.
The board of directors for the company recently issued a statement which read, “We have reviewed the businesses capital structure and we believe the best action to take over the next few years is to return any surplus capital to shareholders. We are also going to be keeping the balance sheet open for the most part.”
The board has made the decision based on their assessment of the housing market in the UK. They have said that it is good that the situation is improving but they are concerned that the housing market will be constrained because of a lack of availability of credit mortgages.
The announcement came at the same time as the builder released their annual results which the city received favourably. After the initial climb to 20 percent, the shares did fall a little but have remained steady at nearly 14 percent higher than before.
An analyst from the firm Peel Hunt is Robin Hardy and he has stated, “This decision shows that Persimmon is taking a disciplined approach and they are not going to be drawn into the negative volume spiral.”
In 2011 the company completed nearly 5700 home sales which was a 2.5 percent reduction on the previous year. In the latter half of the year though things picked up significantly but the average selling price of the homes still remained lower than the previous year at nearly £170,000 per property.