By Karen Peattie

PERSIMMON is to start an “orderly shutdown” of its construction sites until further notice in response to the coronavirus pandemic.

The UK’s second-largest housebuilder said yesterday that it believes “conserving cash and maximising financial flexibility is in the long-term best interests of the business and all its stakeholders”. It cancelled a proposed 125p-per-share interim dividend payment of surplus capital to shareholders due on April 2.

York-based Persimmon has also postponed the proposed annual final dividend payment of 110p per share due on July 6. It said it would reassess the final dividend payment later in the calendar year when the effects of the Covid-19 virus are clearer.

Dave Jenkinson, group chief executive, said Persimmon’s “primary concern is the safety and wellbeing of our customers, staff, contractors and suppliers”. He said the group’s long-term strategy of minimising financial risk and maintaining capital discipline over the long term through the housing cycle “ensureswe are well placed as we enter this period of uncertainty”.

“While the impacts of this pandemic go beyond the normal cyclical nature of the housing market, the group’s high-quality land holdings, significant liquidity and strong balance sheet will allow us to work through these challenges and emerge in a strong position for the benefit of all our stakeholders,” he added.

Persimmon, which has sites across Scotland including Cumbernauld, Dunbar, Dunfermline, Erskine, Helensburgh and Saltcoats, has “ample

cash to weather any storm”, according to David O’Brien, equity analyst at investment bank Goodbody.

“The group has a healthy balance sheet position which will help it weather the storm,” he said.

“It sits on £610 million in cash with availability of a £300m revolving credit facility (RCF) and has £195m of land creditors due in the current year.”

Persimmon will close all of its sales offices from today but will support customers by phone and online. Regional offices will also close with a skeleton staff to facilitate the wider workforce working from home. It will provide a trading update in its annual general meeting on April 29.

Meanwhile, Bellway Homes has revealed a seven per cent fall in pre-tax profit for the six months to the end of January and warned of “a period of substantial disruption” during the current health crisis.

Predicting a “significant risk” to production capability and customer demand in the weeks and months ahead, Bellway said its priority is the health and wellbeing of employees, subcontractors and customers.

Its statement, referring to the “threat to liquidity across the wider economy”, said: “The board is taking immediate action to preserve the strength and resilience of the balance sheet. This includes a pause in new site acquisitions and a reprioritisation of production expenditure to focus on plots which are in the later stages of construction programmes.”

It said reservations have fallen in the past two weeks as the introduction of measures to delay the spread of Covid-19 “inevitably affect demand”.

Bellway, which has closed its sites, sales centres and show homes, has also postponed its interim dividend until later in the calendar year “when there is more certainty with regards to the economic outlook”.

Pre-tax profit for the half year dropped to £291.8m from £313.9m last year, despite a 3.6% rise in revenue to £1.54 billion boosted by a 6.3% increase in housing completions to a record 5,321 homes. Operating margin fell to 19.3% from 21.5%, in line with expectations.