24 April 2008
THURSDAY 24TH APRIL 2008
Persimmon plc is holding its Annual General Meeting at 12 noon today at York
Racecourse where the following comments will be made regarding current trading,
financial performance and the outlook for the financial year. This statement
covers the period from 1st January 2008 to the date of this announcement and
constitutes Persimmon plc's first Interim Management Statement as required by
the UK Listing Authority's Disclosure and Transparency Rules.
When we announced our results for the year ended 31st December 2007 on 25th
February 2008, we commented that purchasers were applying a 'wait and see'
approach to house purchases.
During March, visitor levels to our sites were encouraging, although sales
reservation volumes remained flat and cancellation rates continued at normal
However, over the last three weeks the unprecedented tightening in the mortgage
market has caused a further deterioration of the housing market leading to lower
sales volumes and increased cancellation rates. At the same time the backdrop
of extensively reported concerns about the global credit crisis have continued
to undermine consumer confidence.
As a result an increase in discounting, marketing costs and incentives are being
utilised in the market to compete for the reduced level of demand and this is
having a negative impact on margins. Whilst we continue to focus on achieving
the best possible selling price in every location it is likely that, with the
continuation of current conditions, the market will become more challenging.
Total sales revenue for 2008 is currently c. £1.37 billion compared to c. £1.80
billion last year, a decrease of 24%. Volumes are down less, by c. 18% due to
an increase in the amount of partnership homes we are building.
We welcome the recent Government actions being taken to increase liquidity in
the banking system with the key objective of kick starting the mortgage market.
For this action to be effective it needs to result in an increase in the
availability of credit for house purchasers, particularly first time buyers. We
believe that the Government should urgently consider additional action to
benefit first time buyers by increasing the threshold for stamp duty to support
an improvement in activity and help those who are most in need of assistance.
Further reductions in interest rates would also be helpful in supporting
Because of the uncertainties of the global economy and the UK lending
environment it is difficult to predict when the market will improve. We are
therefore focusing on management of cash flows within the business to ensure
that our balance sheet strength is maintained. Close control of investments in
work in progress, land, build costs and overheads are a priority for our
experienced management teams. We are currently operating off c. 5% more sites
than a year ago. Against the current backdrop we have postponed the
commencement of scheduled new sites until the mortgage market improves. At the
end of March, our borrowings were £1.03 billion. Our committed facilities which
have an average term to maturity of over 3 years provides comfortable headroom
for our seasonal peak debt requirements in April.
Two years ago, in April 2006 John White became Chairman of the Group and at the
same time Mike Farley was promoted to Group Chief Executive. It was agreed by
the Board that for a transitional period, in addition to fulfilling the normal
role of Chairman, John would provide additional support to the Group as the
significant acquisition of Westbury plc was integrated into the business. With
the integration period successfully completed John White will now continue as
Group Chairman with the standard responsibilities that role implies.
At some stage, in our view, housing market activity will improve given the
underlying requirement for more housing and a 'place to live' in the UK. Given
our strong financial position and scale we remain confident in the medium and
long term prospects for Persimmon.
For further information, please contact:
Tel: +44 1904 642 199
John White, Group Chairman
Mike Farley, Group Chief Executive
Mike Killoran, Group Finance Director
+44 (0)20 7153 1523 / +44 (0)7738 724 630
+44 (0)20 7153 1549 / +44 (0)7921 881 800
This information is provided by RNS
The company news service from the London Stock Exchange