Persimmon Regulatory News (PSN)

16 Nov 2009 07:00



INTERIM MANAGEMENT STATEMENT

16 NOVEMBER 2009

Persimmon plc today releases its third quarter Interim Management Statement which covers the period from 1 July 2009 to 16 November 2009.

Since we announced our Half Year Results on 25 August 2009 trading activity levels have continued ahead of last year. We expect to legally complete c. 9,000 homes for the year ending 31 December 2009.

Sales volumes over recent weeks have continued to be satisfactory with the encouraging rate of sales achieved through the summer months being maintained during the autumn period. Prices have also held firm. Forward sales are now well ahead of last year and we expect to carry forward a healthy order book into 2010. We are currently fully sold up for 2009 and have a further c. £500 million of sales already taken for 2010 which is c. 50% ahead of the same point last year.

Continued good visitor levels, low cancellation rates of c. 16% and the increase of c. 6% in the average selling price of homes reserved since 1 July 2009 to c. £173,000 provides a more positive position. The improvement in average selling price is largely the result of a change in sales mix, but also reflects some modest price growth in some regional markets. We have sold a greater proportion of private houses and fewer apartments in the period, whilst Housing Association sales volumes have been lower. We are focusing on margin enhancement wherever possible.

Whilst we are increasing investment in new site openings and some selective land purchases, close control of cash generation continues. Debt continues to reduce, notwithstanding the increased investment in work in progress for year end legal completions and a further 50 new site openings in the second half of 2009 for completions in 2010. At 31 October 2009 total borrowings were £399 million (31 October 2008: £960 million). October is usually a peak debt month and therefore we expect borrowings at the year end to be significantly lower than the £400 million guidance we gave at the announcement of our Half Year Results, which itself was an improvement from previous guidance.

This puts us in a very strong position to continue to open new outlets and purchase new land as and when it becomes available. In the second half we have agreed terms to buy c. 2,850 plots on 34 new sites, including c. 350 plots from our strategic landbank. Most of these additional plots are located in the south of England. We currently have c. 62,500 plots of land owned and under control.

Whilst sales volumes have been consistent, we still have significant concerns regarding the availability of mortgages, particularly the higher loan to value products required by first time buyers. However, we have been pleased with the customer interest in the Government HomeBuy Direct Scheme. We have worked hard to maximise these sales on numerous sites across the UK and recently the 1,000th Persimmon home was reserved with this scheme since its launch in March this year.

In summary, whilst we remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months, debt is reducing well ahead of our previous guidance, sales volumes have stabilised and pricing conditions are currently more positive. Having strengthened our forward order book and reduced borrowings significantly, the Group's financial position remains strong.

We will give a further update on progress and trading following the year end on Thursday 7 January 2010.