Persimmon scraps dividends and shuts down

York house building giant Persimmon plc said on Wednesday it will close all its sales offices from Thursday, March 26, until further notice and said its construction sites “are commencing an orderly shutdown” amid the coronavirus crisis.

Persimmon also said it will cancel its proposed 125p per share interim dividend and postpone its proposed annual, final dividend payment of 110p per share “and reassess it later in the calendar year when the effects of the virus will be clearer.”

In a stock exchange statement, the company said: “Persimmon entered this period of uncertainty with a robust operational performance in the year to date and a strong forward order book.

“Despite this encouraging start to the financial year we are preparing for a significant delay in the timing of legal completions, a rise in cancellation rates and a material slowdown in new sales, the extent and duration of which is uncertain.

“In light of the current uncertainty caused by the Covid-19 virus and its operational impact on UK economic activity, and in line with the group’s strategy of minimising the financial risk through the cycle, the board believes that conserving cash and maximising financial flexibility is in the long term best interests of the business and all its stakeholders.

“Accordingly, the board of Persimmon has decided to: (i) cancel the proposed 125p per share interim dividend payment of surplus capital to shareholders on 2 April 2020; and (ii) to postpone the proposed annual, final dividend payment of 110p per share on 6 July 2020 and reassess it later in the calendar year when the effects of the virus will be clearer.

“Whilst the company’s regular annual payment of at least 110p per share has been stress tested for payment through the housebuilding industry cycle, the Covid-19 virus presents an exceptional set of circumstances.

“Persimmon entered the current year with a strong balance sheet including cash holdings of £844m, land creditors of £435m (£268m payable over 2020) and industry leading land holdings of 93,246 plots owned and under control.

“The board remains confident of the group’s future prospects.

“The group’s current cash position of c. £610m (as at 20 March 2020), deferred land commitments of c. £195m to the end of the current year, availability of the group’s £300m revolving credit facility, together with the measures the board is taking to manage the cash flows of the business, will preserve the strength of the group during this unprecedented period of uncertainty …

“At this stage, given the level of continued uncertainty around economic and business activity, it is not possible to provide financial guidance for the FY20 financial year.”

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