Persimmon, one of Britain's biggest homebuilders, announced yesterday that it will not pay a final dividend for 2008 in a move to build a cash pile and warned of "challenging" times ahead, providing further evidence of the deep slump in the UK house construction industry.
Persimmon, one of Britain's biggest homebuilders, announced yesterday that it will not pay a final dividend for 2008 in a move to build a cash pile and warned of "challenging" times ahead, providing further evidence of the deep slump in the UK house construction industry.
In a trading update, Persimmon said that because of "the restricted credit conditions currently experienced", it would "continue to focus on conserving cash".
The decision to dump the final dividend follows a cut in the interim pay-out to 5p from 18.5p, announced in August.
Panmure Gordon stock-broker had been expecting a 5p-a-share final dividend from the company at its full-year results in March.
Persimmon, which has a number of housing developments in the Glasgow and Lanarkshire areas as well as West Lothian, said it had made "good progress" in talks with its banks about the planned refinancing of its debts.
However, its bank syndicate and other investors were still "actively engaged in establishing facilities appropriate for the future needs of the business together with covenants reflective of current credit market conditions."
Last year, the York-based group appointed NM Rothschild, the City investment bank, to help it renegotiate its borrowing terms. The company trimmed its borrowings sharply in the second half of the year to about £600m at the end of December from £906m in June.
In the trading statement, the firm said that in the second half of the year it had generated good net cash flow from its operations and taken close control of work in progress, selling houses held in stock and cutting its holdings of part- exchange properties by 50%.
It has also benefited from an early receipt of the tax repayment due from the £600m write-down on its land bank announced in October.
The group said profits for the year would be in line with market forecasts. It has completed 10,202 units at an average selling price of about £172,000, to give revenues of about £1.76bn for the year. Persimmon also has forward sales of about £400m.
