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Persimmon restores dividend as housing trade improves.

HOUSEBUILDER Persimmon yesterday ended its two-year dividend drought after it reported improved half-year trading and a stronger order book.

The Charles Church builder said it traded well over the six months to June 30, as revenues lifted 27% to pounds 776.6m on the back of a 16% increase in new home completions and a rise of 8.6% in average selling prices.

It said it expected the improved trend in new home sales to continue, although it warned that uncertainty would remain in the market until clarification of the Government's spending plans in October. The former FTSE 100 company restored its dividend with a payout of 3p a share - the first such award since it offered 5p a share in August 2008.

The move followed underlying profits of pounds 39.4m for the half-year, compared with losses of pounds 16.7m last time. Bottom-line profits improved to pounds 101.4m as a result of a pounds 70.7m write-back on the value of land.

Chairman John White said: "Overall, while we currently remain cautious, we are optimistic about the future of our business."

The order book including legal completions since the start of July 1 stands at pounds 912m, compared with pounds 638m at the end of December.

Persimmon plans to open 75 new sites over the next few months.

The focus on cash generation meant borrowings fell to pounds 122.1m from pounds 494.2m a year earlier.

Panmure Gordon stockbrokers said Persimmon's interim results were ahead of its forecast for underlying profits of pounds 34.1m. The return of the dividend was also six months earlier than it had anticipated.

Steve Williams, managing director of Persimmon Homes East Wales, said: "During the first half of 2010 the market has been challenging with much uncertainty in the jobs market.

"We remain cautious, but by focusing on our production and strong cash management we have been able to invest in both our existing developments and open our new development at Aberdare.

"We also see this as the right time to purchase land and we have been successful in negotiating the purchase of land in Monmouth and Barry which again strengthens our position in our operating area.

"Our hard work in changing our housetype mix to a more traditional two-storey housing product is also starting to help with our sales volumes as we reduce both apartments and three-storey type accommodation from our portfolio."
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Title Annotation:Business
Publication:Western Mail (Cardiff, Wales)
Date:Aug 25, 2010
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