Persimmon eyes recovery
RECOVERY is in sight for housebuilder Persimmon as cancellations fall, purchases rise and debt is slashed.
The York-based group said that recent visitor levels exceeded those of last year for the six months ended August 25 and that cancellation rates had been “significantly” lower throughout the period at 16% compared to 30% for the first half last year.
Current forward sales, including legal completions, since July 1 rose by 9% to £910m.
The group’s investment in part-exchange stock has also decreased to £11.4m at the end of June – down from £120m for the same period 2008.
Pre-tax profit was £9.8m after the exceptional release of £27.9m of net realisable value provision. In the first half of 2008 the group recorded pre-tax profits of £39.9m following an exceptional charge of £64m.
Total sales revenue is £611.8m down from £998.4m for the same period last year.
Year end debt is now expected to drop below £400m from a previous high of £905m.
Persimmon said that the recent introduction of HomeBuy Direct shared equity scheme by the Govement had continued to gain momentum as it provided opportunities for first time buyers.
Mortgage availability continues to be a concern however particularly the scarcity of higher loan to value products.
But the housebuilder said the overall situation in respect of the mortgage market and valuations had recently shown signs of improvement.
John White, Persimmon’s group chairman, said: “We expect sales rates to remain resilient due to the successful destocking that has occurred in the industry combined with the continuing good levels of underlying demand for new homes in the UK.
“Recently, selling prices have stabilised in most parts of mainland UK. Future volume increases and price movements will be dependent upon mortgage availability, job prospects and the health of the general economy.”
He added: “Our strong balance sheet, reduced debt, long landbank and strategic land opportunities, combined with an experienced management team provides an excellent platform to create value for shareholders.”
