Persimmon reports £780m pre-tax loss

Persimmon has kicked off the house builders’ results season with a £780m pre-tax loss for 2008.

The problem was the burden of exceptional items that ran to a massive £900m.

Without that, Persimmon would have run up a profit figure of £120m – not bad given the state of the market.

Even the latest £780m loss fails to overshadow the massive profits recorded by Persimmon in the recent past – its cumulative pre-tax profit in the previous two years ran to no less than £1.2bn.

The latest results cover the 12 months to 31 December 2008.

Turnover of £1.8bn was 42% down on the previous figure of £3.0bn which generated a pre-tax profit of £580m.

Persimmon has announced that it has secured new credit facilities running to £1.1bn.

Operations statistics show 10,000 completions - a reduction of 36% on the previous figure of 16,000.

Average selling price of £173,000 was 9% down from £190,000 in 2007 as a result of continued pressure on prices for private dwellings and a 22% increase in affordable homes completions.

The £900m exceptional item was the result of:

• non-cash impairments of land and work in progress of £650m
• goodwill of £200m

In order to maintain its capability for the future, Persimmon has retained three divisions and maintained the three core brands: Persimmon, Charles Church and Westbury Partnerships.

It has reduced the number of operating businesses from 36 to 25 with a number of them dual-branding both Persimmon and Charles Church.

North Division

The division completed 2,800 homes (2007: 5,200). This reduction was as a result of the slower economy and poorer consumer sentiment experienced in the Yorkshire and North West regions.

Prices remained resilient in the North East as a result of a competitive pricing strategy.

The average selling price fell to £157,000, a 10% reduction on prior year.

Central Division

The number of homes sold in this division was 2,700 (2007: 4,200). The average selling price reduced from £177,000 in 2007 to £165,000.

The Central division housing market has been stronger in the outskirts of London and the Shires, but pricing has been more competitive in and around Birmingham, particularly in the apartment market.

South Division

In this division there has been a 33% reduction of homes sold to 2,400 (2007: 3,600).

Charles Church

The average sales price reduced by 13% to £223,000 as compared with £257,000 in 2007.

Space4

This has been a very challenging year for the Space4 business which completed 1,200 units compared with 2,600 in 2007.