Persimmon’s cash conservation strategy pays off

PERSIMMON’S cash saving efforts look to be paying off with the housebuilder successfully reducing its total borrowings.

The York-based firm said that borrowings at the end of 2008 were £600m compared to £906m in June.

It said that close control of work in progress, a focus on sales of stock properties and a more than 50% reduction in part exchange holdings had resulted in strong cash generation despite the previously reported deterioration in trading conditions encountered from early September when it was forced to write off £600m off the value of its land.

Sales on more than 10,000 units at an average selling price of £172,000 have been completed representing a turnover of £1.76bn.

Furthermore, discussions on refinancing the group’s credit facilities have also started and according to Persimmon good progress in being made.

“..our bank syndicate and private placement investors are actively engaged in establishing facilities appropriate for the future needs of the business together with covenants reflective of current credit market conditions,” it said.

Although results for the full year will be in line with market expectations the housebuilder said it doesn’t intend to pay a final dividend this year.

It said: “While we believe that the long term future for the UK housing market remains good, the short term outlook is challenging. However, we currently have forward sales of around £400m.”

Further details of the group’s performance for the year together with a general market update will be provided with the announcement of its annual results March 3.