Or am I being cynical
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The top end profits could also come from the fact that they paid for the houses to be built (& accrued the costs) in 08/09 but did not sell until 10/11: likely at a loss, but as it’s a different reporting year who noticed?
Or am I being cynical
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Housebuilder Persimmon expects 'top end' profits
The builder said it had managed to boost margins to offset a small drop in selling prices for its housing, which it pinned on a rise in first-time buyers.
That meant underlying pre-tax profits for 2011 should be 50pc higher than the previous year, the company reported in a trading update. Analyst estimates have so far been for profits of £130m to £148m.
"Whilst the general economic backdrop to the UK housing market remains challenging, we have experienced encouraging levels of visitors, resilient sales reservations, low cancellation rates and stable prices," Persimmon said.
Sales for the year were almost flat, at 9,360 against 9,384 a year earlier. Within that, the proportion of first-time buyers rose from about 20pc to 25pc, attributed mostly to the Government's FirstBuy shared equity scheme, where people can get cheaper mortgages with an interest-free loan from the developer and the state.
The rise was blamed for Persimmon's average selling price dropping 2pc on the previous year to £164,000. However, the builder said it had boosted its operating margin from 8.2pc in 2010 to closer to 10pc, partly through a shift away from flats towards houses, which traditionally sell for more per square foot and are cheaper to build.
The company is also building on land it pushes through the planning process itself – a lengthy task but one which means management are using land bought at a discount.
In addition, the builder has cut its interest payments, turning £51m of debt into £40m of cash balances. Persimmon said it entered 2012 in a "strong" position, with its order book standing at £615m, against £565m a year ago.
Looking ahead, the company welcomes the Government's new mortgage indemnity scheme, expected to signal the return of 95pc loan-to-value mortgages for first-time buyers. It should prove more significant that the existing FirstBuy scheme, management believe.
"It [this type of mortgage] is something that has not been available in the marketplace, particularly for new homes, for some time," said Mike Farley, Persimmon chief executive. "This generation of first-time buyers have to find more deposit than any other."
The bullish update helped the company's shares climb 25.5 or 5.3pc to close at 506.5p.
Source: Housebuilder Persimmon expects 'top end' profits - Telegraph
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This would have never happened under Labour.
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