Interim Management Statement

RNS Number : 1376W

Persimmon PLC

15 November 2010

 

INTERIM MANAGEMENT STATEMENT

MONDAY 15 NOVEMBER 2010

Persimmon plc today releases its Interim Management Statement which covers the period from 1 July 2010 to 15 November 2010 and confirms current trading in line with expectations.

Since 1 July 2010, sales volumes have remained stable with sales prices and margins holding firm.  Although weekly sales increased gradually during September, we did not experience the normal autumn increase in visitor levels and reservations.  Cancellation rates remain at a low level of c. 19%. 

As previously stated at the time of our Half Year Results announcement, we anticipate increasing our sales revenues by c. 10% this year.  We expect to legally complete c. 9,400 homes for the year ending 31 December 2010 (2009: 8,976), an increase of c. 5%.  We have continued to generate good levels of free cash and now expect that total borrowings at the year end will be lower than £80 million, well ahead of previous guidance.

Consistent with our stated strategy of focusing on improving margins, we expect to increase underlying operating margin for the full year to c. 8% (2009: 4%).

Mortgage availability remains a major obstacle for customers who wish to purchase a home, especially first time buyers who do not have the required large deposits.  Further recovery in industry output and sales will be dependent upon an increase in the supply of mortgage products on appropriate terms. 

However, we are fully sold up for the current year and we are in a strong financial position with over £460 million of sales already reserved beyond 2010 (2009: £500 million).  Our new site starts are proceeding as planned with 60 new sites opened so far through the second half with another 15 to come through by the end of November.  This will maintain the strength of our sales network at c. 380 active sites into the New Year.  The outlook for sales and volumes for the full year of 2011 is as usual dependent upon the forthcoming spring selling season.

We have remained selective in our land replacement since the half year and have acquired c. 4,000 new plots on 41 sites so far in the second half, including c. 20% of plots from our strategic landbank.  These investments continue to be made at good margins and will offer excellent returns to the business over the medium term.  We also continue to improve the quality of our existing landbank in support of the delivery of improving underlying operating margins.

In summary, we expect our performance for 2010 to demonstrate the progress we have made in pursuing our strategy of operating margin improvement and growth in operating cash generation.  With the strength of our balance sheet and high quality land holdings we will continue to successfully develop our business in these challenging markets.

We will give a further update on progress and trading following the year end on Monday 10 January 2011.

For further information, please contact:	Edward Orlebar Charlotte McMullen Marylène Guernier
Mike Farley, Group Chief Executive Mike Killoran, Group Finance Director
Persimmon plc	M:Communications
Tel: [phone]	Tel: [phone]

 

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