House builder Persimmon has reported encouraging interim results for the half year to 30 June 2010, with turnover up 26% at £785m.
Legal completions increased by over 16% to 4,657 homes (H1 2009: 4,006), and the average selling price was 8% up at £168,500. There has been underlying price growth of 3% since 1 January 2010.
Total sales for the year, including legal completions to date, contracted properties and forward reservations are £1.5bn (30 June 2009: £1.3bn). Cancellations remain at low levels in line with the prior year at around 16%.
Persimmon expects operating margins for the first half, before exceptional items, to have increased to c. 7.5% (H1 2009: 1.5%).
Borrowings at 30 June 2010 were £122 million (June 2009: £494 m) representing gearing of c. 7%. This is a further reduction in borrowings of over £145m since 1 January 2010.
In a statement, the house builder said: “Whilst sales prices and margins have continued to increase from the beginning of the year, since early May we have experienced the normal seasonal slow down in private sale reservations.
“We believe this was also due partly to the uncertainty created prior to the announcement of the new Government's Budget proposals. In the short period since the Budget, sales have been in line with our expectations.”
Persimmon said it had 'replanned' the bulk of its existing landbank with 85% of our plots now having planning for traditional two and three storey housing, for which it said demand is strongest.
The house builder has acquired an additional 4,000 plots, and agreed terms on a further 3,500. Its overall landbank is at roughly the same level as at the start of the year..
The statement concluded: “We have made good progress with our planned strategy of debt reduction and margin improvement. Whilst we remain cautious, we have a strong platform for profit growth as and when the housing market improves further.”