Confident Persimmon hikes divi by a third

23rd Aug 2011 07:24

Persimmon, the house builder, saw underlying profits surge in the first half of 2011 on the back of gross margin gains and a more efficient capital structure.Underlying profit before tax rose 52% to £59.7m in the first half of 2011 from £39.4m last year. Pre-tax profits after goodwill impairment and exceptional items were £60.3m, compared with £101.4m for the first half of 2010, which included a net exceptional credit of £63.6m. First half revenues declined to £712.8m from £776.6m last year, as the number of legal completions dropped, from 4,657 to 4,439. The average selling price for the houses Persimmon has built has dropped by 3.7% to £162,647. The firm argues this is due to the types of development it is putting on the market. The declines in completions and the average selling prices were both anticipated by the market. Panmure Gordon had predicted average selling prices would be down 4.0% year-on-year. Persimmon said it expects to complete a similar number of new homes during 2011 to the total completed in 2010.The underlying operating margin improved to 9.0% from 8.0% last year. Underlying gross margin increased to 13.7% for the first six months of the year from 12.3% the year before. As at August 22, the group's forward sales of around £1,005m were 10% higher than the £912m seen at the same stage of last year. "At this time circa 60% of our current forward order book is already contracted and margins on our forward sales show continued improvement compared to those delivered in the first half of the year," said Persimmon's Chairman, Nicholas Wrigley. "In line with our plans, we successfully opened 70 new sites in the first half of the year and maintained our strong outlet network at circa 380 active sites through the period. We anticipate opening a further circa 70 new sites in the second half of the year as we continue to refresh our network. This allows us to capture pent-up demand in areas which continue to suffer from the lack of supply of new homes," Wrigley claimed.Net asset per share rose 6.4% to to 601.1p and interestingly the group has managed to reduce debt from £122.1m at the half-way stage of last year to just £15.2m at the end of June this year. Cash generation totalled £72.5m, down from £185.6m in the first half of last year."Whilst the UK housing market remains stable we expect that it will continue to be challenging due to the overall economic situation. We continue to explore opportunities to improve the availability of mortgage finance with our key mortgage lending partners," Wrigley said.The interim dividend has been boosted by 33% to 4p per share from 3p last year.BS