Persimmon Regulatory News (PSN)

9 Jan 2008 07:00

Persimmon PLC09 January 2008 TRADING UPDATE - WEDNESDAY 9 JANUARY 2008 Persimmon plc announces the following trading update ahead of its PreliminaryResults to 31 December 2007, which will be announced on Tuesday 26 February2008. Despite experiencing more challenging trading conditions in the second half of2007, Persimmon expects to announce another strong set of results for the year.We have improved operating margins for the year through a combination of tightcost control, the delivery of further synergy savings from the Westburyacquisition and the benefits emerging from the successful development of ourstrategic land portfolio. This will deliver an increase in profit before tax for2007 in line with the mid range of analyst expectations. The Board confirms that, in line with its previous statement, it recommendspaying a minimum 10% increase in the dividend for the year ended 31 December2007 subject to shareholder approval at the Annual General Meeting in April2008. Since we reported our Interim Results on 21 August 2007, the market has beenmore difficult. Volumes have been impacted as lower consumer confidence and thetightening of credit markets reduced activity in the important Autumn period. Asa result we have achieved 15,905 legal completions during 2007, a reduction of5% against 2006 (16,701). However, sales prices have remained resilient during this period, although asanticipated at the time of our Interim Results, we have experienced an increasein incentives and marketing costs. Underlying price growth of our homes for sale was c. 3% during the year. Theaverage selling price of our homes increased to £189,558 (2006: £188,129). Thisincrease in average selling price has been achieved whilst at the same time wehave increased the proportion of affordable homes developed. During the period we were also increasingly selective with our land purchasesand continued to exercise tight control over our work in progress investment toensure that cash management remained robust. Our total landbank remains at asimilar level to last year and currently we own or control c. 79,000 (2006:80,085) plots for future development. Our balance sheet remains strong and cash flows are healthy, with gearing at theyear end of c. 31% (2006: 33%). Forward sales into 2008 were £603 million (December 2006: £701 million). Thislargely reflects the lower level of sales achieved over the last 3 months of2007 due to market uncertainties. Now that interest rates have changed directionand with the Spring selling period ahead of us we expect to experience anincrease in the level of activity over that achieved in the recent months. Weare operating from c. 7% more outlets than in January 2007 which should furthersupport our sales activity for the Spring season. It is too early in the New Year to predict exactly how the market will developover the next few months. However, we are confident that our focus on cashmanagement through these more challenging times will ensure that when the marketimproves we are well set to take advantage of it. We believe that the underlyingfundamentals for our industry remain intact and supportive. Details of our Results for 2007 and a future market update will be announced onTuesday 26 February 2008. For further information, please contact:Mike Farley, Group Chief ExecutiveMike Killoran, Group Finance Director Persimmon plcOn 9th January 2008: +44 (0) 20 7153 1570After this date: Tel: +44 (0) 1904 642 199 M: CommunicationsEdward Orlebar / Charlotte McMullenTel: +44 (0) 20 7153 1523 / 1549 This information is provided by RNS The company news service from the London Stock Exchange