Persimmon sees signs of improvement

Persimmon back in black

Persimmon, the housebuilder, reported a return to full-year pre-tax profit, helped by a one-off gain from the revaluation of its land values.

Persimmon, the UK's largest housebuilder by market value, plans to create 90 new sites after trading conditions showed further signs of improvement. Some of the sites will be facilitated by Government grant funding for affordable homes.

Persimmon reported a 7% rise in sales since the beginning of 2010 and said the sales rate per site was up by a fifth due to the company operating from fewer locations than a year earlier.

Annual sales fell to £1.42bn in 2009, compared with £1.76bn a year earlier.

However, the company generated a pre-tax profit of £77.7m, compared with a £780m loss in 2008, thanks in large part to a write-up of £74.8m based on a re-evaluation of the value of its land assets.

The company, which is one of the less indebted UK housebuilders, generated £356.8m of free cash flow in 2009, compared with £239.2m in the previous year.

This helped it to reduce net borrowings from £600.7m in 2008 to £267.5m last year, easily within the company’s debt facilities of £1bn, arranged in March last year.

Persimmon also opened 90 new sites during the year, leaving it with land holdings of 60,454 plots at the end of 2009, which according to current build rates should provide six years’ supply.

John White, chairman, said: “Our cash generation and cost control have placed the business in a strong position both operationally and financially for a recovering market.

“Prices have held firm since the beginning of the year and we remain focused on improving our operating margins and to profitably grow the business.”

However, the company added: "It is too early to make a precise forecast about the housing market, particularly in an election year, and we will remain cautious in our investment decisions."

The company reiterated its previous announcement that it does not intend to pay a dividend for 2009, following its strategy of conserving cash in the business to strengthen the balance sheet.


Persimmon shares, which have risen more than 18 per cent in the last year, rose 6.9p or 1.7 per cent in early trading on Tuesday to 407½p.

(Source)