Persimmon Regulatory News (PSN)

24 Apr 2008 07:01

Persimmon PLC24 April 2008 AGM STATEMENT THURSDAY 24TH APRIL 2008 Persimmon plc is holding its Annual General Meeting at 12 noon today at YorkRacecourse where the following comments will be made regarding current trading,financial performance and the outlook for the financial year. This statementcovers the period from 1st January 2008 to the date of this announcement andconstitutes Persimmon plc's first Interim Management Statement as required bythe UK Listing Authority's Disclosure and Transparency Rules. When we announced our results for the year ended 31st December 2007 on 25thFebruary 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 salesreservation volumes remained flat and cancellation rates continued at normallevels. However, over the last three weeks the unprecedented tightening in the mortgagemarket has caused a further deterioration of the housing market leading to lowersales volumes and increased cancellation rates. At the same time the backdropof extensively reported concerns about the global credit crisis have continuedto undermine consumer confidence. As a result an increase in discounting, marketing costs and incentives are beingutilised in the market to compete for the reduced level of demand and this ishaving a negative impact on margins. Whilst we continue to focus on achievingthe best possible selling price in every location it is likely that, with thecontinuation of current conditions, the market will become more challenging. Total sales revenue for 2008 is currently c. £1.37 billion compared to c. £1.80billion last year, a decrease of 24%. Volumes are down less, by c. 18% due toan increase in the amount of partnership homes we are building. We welcome the recent Government actions being taken to increase liquidity inthe 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 theavailability of credit for house purchasers, particularly first time buyers. Webelieve that the Government should urgently consider additional action tobenefit first time buyers by increasing the threshold for stamp duty to supportan improvement in activity and help those who are most in need of assistance.Further reductions in interest rates would also be helpful in supportingsentiment. Because of the uncertainties of the global economy and the UK lendingenvironment it is difficult to predict when the market will improve. We aretherefore focusing on management of cash flows within the business to ensurethat our balance sheet strength is maintained. Close control of investments inwork in progress, land, build costs and overheads are a priority for ourexperienced management teams. We are currently operating off c. 5% more sitesthan a year ago. Against the current backdrop we have postponed thecommencement of scheduled new sites until the mortgage market improves. At theend of March, our borrowings were £1.03 billion. Our committed facilities whichhave an average term to maturity of over 3 years provides comfortable headroomfor our seasonal peak debt requirements in April. Two years ago, in April 2006 John White became Chairman of the Group and at thesame time Mike Farley was promoted to Group Chief Executive. It was agreed bythe Board that for a transitional period, in addition to fulfilling the normalrole of Chairman, John would provide additional support to the Group as thesignificant acquisition of Westbury plc was integrated into the business. Withthe integration period successfully completed John White will now continue asGroup Chairman with the standard responsibilities that role implies. At some stage, in our view, housing market activity will improve given theunderlying requirement for more housing and a "place to live" in the UK. Givenour strong financial position and scale we remain confident in the medium andlong term prospects for Persimmon. For further information, please contact: Persimmon plc Tel: +44 1904 642 199 John White, Group ChairmanMike Farley, Group Chief ExecutiveMike Killoran, Group Finance Director M:Communications Ed Orlebar:+44 (0)20 7153 1523 / +44 (0)7738 724 630orlebar@mcomgroup.com Charlotte McMullen: +44 (0)20 7153 1549 / +44 (0)7921 881 800mcmullen@mcomgroup.com This information is provided by RNS The company news service from the London Stock Exchange