Persimmon profit just 13% of last year's figure

Persimmon’s interim pre-tax profit has dived to £37m - just 13% of the figure of £281m made in the same period last year.
 
The housebuilder’s latest figures cover the six months to 30 June 2008 and reflect the acute downturn in the UK housing market.
 
Interim turnover was down by a third at £1.0bn
 
Trading performance shows:

- sales of new homes: 5,500 (previous figure 8,000)
- average selling price: £181,000 (previous figure  £189,255)

The latest profit was trimmed back severely as Persimmon took exceptional costs running to a total of £64m with this figure being made up of three elements:
 
- £15m restructuring costs
- £40m write-down of the value of owned land (the figure represents 1.5% of the value of the landbank on the group’s balance sheet)

- £9m of fees suffered as a result of pulling out of new land transactions

In the last full year, Persimmon racked up a staggering pre-tax profit of £581m.
 
Borrowings now stand at £905m, well up on the figure of £721m at the start of 2008.
 
These figures mean that gearing (i.e. the ratio of borrowings to assets) stands at 40%, a rise of 9% during the latest six-month period.
 
John White, group chairman, said: “This level of debt is comfortably within our committed facilities of £1.4bn. As long as market conditions do not deteriorate further we would expect to generate £200m of free cash inflow through the second half of this year.”
 
Despite telling the market that times are tough, Persimmon has decided that even in today’s trading conditions there is sufficient cash washing about to pay shareholders a dividend of 5p per share.
 
The restructuring actions taken by Persimmon this year include the following measures:
 
- three offices closed in February
- 1,100 office redundancies
- 900 site based job losses
- land purchases significantly reduced
- build costs reduced
- focus on increasing affordable housing volumes
- postponement of some new site starts

The £15m cost of the restructuring is expected to lead to annual cash savings of around  £45m with the full benefit starting to kick in from September this year.