Persimmon write-off as trading conditions deteriorate

HOUSEBUILDER Persimmon said today that it had encountered “deteriorating trading conditions” since reporting its half year results in August.

The York-based group is writing £600m off the value of its land due to the current market conditions.

The housebuilder said the write down would bring its net asset value per share to 610p and further details would be provided when it announces full year results in March.

However Persimmon – which has made 2,000 staff redundant since the start of the year – said it expects trading results for the full year to be in line with forecasts.

In a interim management statement – brought forward from November 18 after trading conditions worsened following the financial markets crisis – the group said it now anticipates a 10% reduction in the value of its land holdings for the second half.

Persimmon expects to legally complete about 10,000 homes for the year ending December 31.

Sales revenues for this year including legal completions to date are at around £1.8bn with a further £250m of sales already taken for 2009.

The group has continued to be affected by restrictions in the availability of mortgages, adding that cancellation rates have increased by 35% over recent weeks due to “market uncertainties.”

It added that sales conditions remained extremely competitive, with incentives and marketing costs leading to further margin pressures.

Mike Farley, group chief executive, said: “The uncertainty created in the housing market by the increasingly turbulent and uncertain outlook in financial markets has had a negative impact on all our regions across the UK.

“We are fully supportive of the Government’s initiatives to increase mortgage availability to 2007 levels. Until this begins to take effect we do not expect to see any improvement in trading conditions and we continue to carefully monitor all our activities.”