Persimmon Plc, the U.K.'s largest house builder by market capitalization, said today that it's ready to take advantage of opportunities as they arise amid improved markets although it will be cautious in its investment decisions.
The company said that prices have held firm since the start of the year and that it booked a 29% increase in forward sales to £900 million. It also plans to open 90 new sites in the first half of 2010 to bring the total to 460.
But although conditions improved in the second half of the year, Persimmon's full-year results were below 2008.
Legal completions fell to 8,976 during the year to end-December, from 10,202 in 2008, and the average selling price dropped to £160,513 from £172,994.
Full-year sales revenue fell to £1.42 billion from £1.76 billion in 2008 but the company made a profit of £77.8 million, from a loss of £780 million after booking a write back on land values of £74.8 million.
John White, Group Chairman, said: "Our cash generation and cost control have placed the business in a strong position both operationally and financially for a recovering market. Prices have held firm since the beginning of the year and we remain focused on improving our operating margins and to profitably grow the business."
Persimmon, like other house builders, has been hit hard by the lack of mortgage financing and demand for housing. But as house prices recover, the company has been focusing on cash generation to buy land cheaply. It now has to go through its old land bank quickly, in order to secure better margins by building on cheaper land.
Persimmon, unlike it's major competitors has not bought large amounts of land recently, and it's landbank is less now at 60,454 plots than it was last year ( 69,279), which is 6.7 years supply at current volumes. It has however recently agreed to buy 3000 plots in southern England.
Its operating margins in the second half of the year already improved to 6% from the 1.6% reported in the first half but full-year margin only reached 4% compared with 14% reported in 2008.
It reduced its net borrowings to £267.5 million from £600.7 million, and is operating comfortably within it's facilities.
It's NAV per share increased by 4.3% to 540.2p (2008: 518.0p) but Persimmon shares closed yesterday at 400 pence, giving the company a £1.17 billion market capitalization, but suggesting there is value in the shares.
![[Valid RSS feed]](http://articlepile.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites