"Focused delivery of our purpose - producing a resilient first half performance for the benefit of all stakeholders
AGENDA
Page | Presented by | ||
Company purpose and strategic focus | 3 | Dave Jenkinson | |
| Covid-19 | 5 | Richard Stenhouse |
| Operational review | 11 | Dave Jenkinson |
| Financial review | 21 | Mike Killoran |
| Strong platform | 32 | Dave Jenkinson |
| Summary | 38 | Dave Jenkinson |
| Appendices | 39 |
LONG TERM SUSTAINABLE RETURNS FOR ALL
- A clear vision which the whole company is working towards, to produce long term sustainable returns for all
- Our company purpose on how we achieve that vision is now fully embedded within the business
- Company purpose
- To build good quality homes at a range of price points to meet the UK's housing needs
- To create and protect superior long term value through the housing cyclefor:
- shareholders
- customers
- workforce
- wider stakeholders
3
OUR CLEAR COMPANY PURPOSE HAS NEVER BEEN MORE IMPORTANT IN PERIODS OF UNCERTAINTY AND DISRUPTION
- This clear purpose has been fundamental to:
- How we responded to the threat of Covid-19
- The Group's half year performance
- Our strong platform to deliver the country's homes
4
PRIORITISED SAFETY OF WORKFORCE, COLLEAGUES, CUSTOMERS AND LOCAL COMMUNITIES
- Response was responsible, swift and effective
- Compliance with Government guidance in England, Wales and Scotland
- Safe operating procedures developed covering all disciplines
- Oversight and enforcement of Covid-19 controls
- Covid Secure workplace environment established
5
MINIMISED AND CONTAINED DISRUPTION - ENSURING SOUND FUTURE PLANNING
- Persimmon has not taken advantage of any Covid-19 Government support
- All taxes paid in full and on time
- This ensured responsible stewardship whilst maintaining operational momentum
- All staff paid in full throughout ensuring efficient return to work when permitted
- Skeleton staff presence maintained in regional offices with home working fully supported
- Strong control over operations maintained throughout
- Progress continued to be made across all business areas
- Over 5,500 hours of training provided to c. 5,300 participants during Covid disruption
6
SAFE AND AGILE RESPONSE TO CONSTRUCTION ON SITE
- Orderly shutdown of all sites through April 2020
- Close contact with key suppliers maintained throughout
- Persimmon's operational agility enabled safe and efficient restart of build programmes
- From 27 April 2020 construction recommenced in England and Wales (from 15 June 2020 in Scotland)
- "Passport to work scheme" introduced for all sub- contractors
- Covid-19enforcers provide on-site supervision
- Safe and efficient return to operational capacity
- Proven operating model to deal with future disruption
7
EFFECTIVE SALES PROCESS DURING LOCKDOWN
- A remote sales presence provided throughout the lockdown period
- From 25 March 2020 all site sales offices closed
- Online reservation procedure
- Site sales offices now open in all regions
- Strong sales performance since the end of lockdown
8
CUSTOMER COMMUNICATION MAINTAINED
- Emergency appointments only
- Routine maintenance commenced from 15 June 2020 in England and Wales (from 13 July 2020 in Scotland)
- "Passport to work scheme" introduced for all operatives
- Individual risk assessments for each customer
- Digital New Home Demonstrations
9
CONTINUED COMPREHENSIVE, FLEXIBLE RESPONSE TO COVID-19
- Health and safety protocols implemented and monitored in line with official guidance
- All areas of the Group can react to local and national restrictions if required
- Persimmon is maintaining strict Covid Secure working practices
- Fully prepared and ready to respond to future Covid-19 challenges
10
AGILE RESPONSE TO COVID-19
- The challenges of Covid-19 were responded to sympathetically and with agility
- Reflected in the key areas of our business focus:
- Financial performance
- Implementation of Customer Care Improvement Plan
- Providing homes for all
- Workforce training and relationships
- Support for communities and wider stakeholders
- Building sustainable homes and communities
11
RESILIENT FINANCIAL PERFORMANCE
H1 2020 | H1 2019 | Change | |
New home legal completions | 4,900 | 7,584 | (35%) |
Average selling price | £225,066 | £216,942 | + 3.7% |
New housing revenue | £1,102.8m | £1,645.3m | (33%) |
Operating profits * | £293.2m | £510.1m | (43%) |
Operating margin - New housing ** | 26.6% | 31.0% | (4.4%) |
Profit before tax | £292.4m | £509.3m | (43%) |
Net cash inflow from operations (pre working capital) | £298.6m | £516.2m | (42%) |
Cash | £828.9m | £832.8m | n/a |
Land creditors | £374.5m | £484.0m | (23%) |
Return on Average Capital Employed *** | 32.5% | 50.6% | (36%) |
Net asset value per share | 1081.9p | 890.8p | + 21% |
- Underlying performance presented before goodwill impairment of £1.6m (H1 2019: £4.1m)
- Stated before goodwill impairment and based on new housing revenue
- 12 month rolling average pre goodwill impairment of £4.8m (H1 2019: £8.9m)
12
RESILIENT FINANCIAL PERFORMANCE
- Trading performance resilient through period of disruption
- Profit before tax of £292m
- Industry leading operating margin of 26.6%* (2019: 31.0%)
- Strong liquidity with cash of £829m (2019: £833m)
- Work in progress of £1.22bn to support positive second half outturn (Dec 2019: £1.09bn)
- Carrying c. 14% more equivalent new homes constructed than a year ago
- WIP as % of forward sales at 66%** (2019: 63%)
- Reduction in deferred land commitments to £374m
- Dividend equal to 40p per share in September - review a further payment later in the year
* Stated before goodwill impairment and based on new housing revenue- Based on forward sales as at 1 July
13
CUSTOMER CARE IMPROVEMENT PLAN PROGRESSING AND
DELIVERING
- Significant progress across a suite of measures
- Communications improved and customer portal being rolled out
- Homebuyer Retention Scheme delivering customer and behavioural benefits - highlighted as good practice by the Consumer Code
- Persimmon Way progressing well and will be operational Q4 2020
- All new sites have access to full fibre to the home through FibreNest
- Financial investment stabilised
14
STRONG SIGNS OF PROGRESS
HBF star rating only one metric
• Star rating trending above 5* since the start of 2020
• Currently scoring 89.5% for the 2019/20 HBF reporting year
Over 40% of customers now using the Homebuyer Retention Scheme Over 8,000 FibreNest customers
We welcome the introduction of the industry ombudsman
Trustpilot
15
PROVIDING HOMES FOR ALL
- 31 regional housebuilding offices across the UK
- Ability to flex output to over 20,000 new homes per annum
- Wide range and choice of new homes across all developments
- House prices range from £40,000 to £900,000
- 32% of private sales priced below £200,000
- 10% of private sales priced lower than £150,000
- Average private selling price c. 17% lower than the UK national average*
- c. 50% of private new homes sold to first time buyers
- National average selling price for newly built homes sourced from the UK House Price Index as calculated by the Office for National Statistics from data provided by HM Land Registry. Group average private selling price is £246,208
16
WORKFORCE TRAINING - LONG STANDING COMMITMENT TO PROVIDE OPPORTUNITIES FOR ALL
- Career development opportunities
- Further 95 colleagues promoted during H1 2020
- c. 15% of our workforce across all disciplines are trainees - including over 420 traditional apprentices
- Significant training programme investment
- c. 5,700 training days delivered during first half
- Over 330,000 minutes of online training since the start of April
- Recognised as an industry leader by the Social Mobility Pledge and Women into Construction
17
SYMPATHETIC WORKFORCE RELATIONSHIP
- Continued to invest and support staff during lockdown
- Introduction of remote working
- Retained all staff on full pay
- Pay increases and bonus paid to staff
- Provided additional mental health support and resource
- Positive feedback from Employee Engagement Panel
- Staff never been more important than in uncertain times
18
BUILDING SUSTAINABLE HOMES
- Continued development of focused sustainability strategy
- Dedicated resource established
- Work underway to assess appropriate science based carbon reduction targets
- Evaluation of the impact of Future Homes Standard
- Full environmental assessment undertaken on all sites prior to commencement
- Engagement with local authorities and communities
- Environmental champions introduced covering all regions
- Promotion of awareness on environmental and sustainability issues across the Group
19
BUILDING SUSTAINABLE HOMES …. AND COMMUNITIES
- Supporting customers, colleagues and communities
- Signatory to the Covid-19 Business Pledge
- c. 50,000* jobs supported across our communities and supply chain
- In first half of 2020 over £370,000 donated to our Community Champions
- £1m pledge for 2020 to Building Futures campaign
- Significant investment in our communities in last 18 months
- Over £675m invested in local communities
- 4,263 new homes delivered to our housing association partners
* Estimated using an economic toolkit
20
FINANCIAL REVIEW
Page | ||
Robust first half performance | 22 | |
Margins and cost recoveries | 23 | |
High quality land holdings at 30 June 2020 | 24 | |
Off-site manufacturing - commitment to self help | 25 | |
| Strong balance sheet | 26 |
| Strong liquidity | 27 |
| Managing the cycle | 28 |
| Capital return | 29 |
| Future value delivery | 31 |
21
ROBUST FIRST HALF PERFORMANCE
H1 2020 | H1 2019 | Change | ||
Legal completions | ||||
Private | 4,029 | 5,963 | (32%) | |
Partnerships | 871 | 1,621 | (46%) | |
Total | 4,900 | 7,584 | (35%) | |
Average selling price | ||||
Private | £246,208 | £242,912 | + 1% | |
Partnerships | £127,266 | £121,413 | + 5% | |
Group | £225,066 | £216,942 | + 4% | |
New housing revenue | ||||
Private | £992.0m | £1,448.5m | (32%) | |
Partnerships | £110.8m | £196.8m | (44%) | |
Total | £1,102.8m | £1,645.3m | (33%) | |
- Covid-19related build disruption
- Housing revenues down 33%
- Mitigated by operational continuity
- 2,140 customers used the Government Help to Buy scheme (2019: 3,451)
- £292.4m profit before tax (2019: £509.3m)
- Selling prices have remained firm
- Period of reduced build and site overhead cost efficiencies
- Covid-19cost impact assessed at c. £11m
* Stated before goodwill impairment
22
INDUSTRY LEADING MARGINS MAINTAINED
New housing | 2020 | 2019 | 2020 | 2019 | 2019 | 2019 | ||
Per plot: | H1 | H1 | Change | H1 | H1 | Change | H2 | H2 |
Revenue | £225,066 | £216,942 | + 3.7% | 100.0% | 100.0% | £214,579 | 100.0% | |
Land costs | (£31,682) | (£30,309) | + 4.5% | (14.1%) | (13.9%) | (0.2%) | (£30,272) | (14.1%) |
Build and other direct costs | (£122,926) | (£113,393) | + 8.4% | (54.6%) | (52.3%) | (2.3%) | (£114,760) | (53.5%) |
Gross profit / margin | £70,458 | £73,240 | (3.8%) | 31.3% | 33.8% | (2.5%) | £69,547 | 32.4% |
Operating expenses * | (£11,310) | (£6,656) | + 69.9% | (5.0%) | (3.1%) | (1.9%) | (£6,321) | (2.9%) |
Other operating income | £679 | £668 | + 1.6% | 0.3% | 0.3% | (0.0%) | £450 | 0.2% |
Operating profit / margin * | £59,827 | £67,252 | (11.0%) | 26.6% | 31.0% | (4.4%) | £63,676 | 29.7% |
- Underlying performance presented before goodwill impairment of £1.6m (H1 2019: £4.1m; H2 2019: £3.2m)
- Housing gross margin remained resilient at 31.3% (H1 2019: 33.8%; H2 2019: 32.4%)
- Supported by high quality land holdings
- Continued investment in all our workforce and operations without recourse to Government funding
23
HIGH QUALITY LAND HOLDINGS UNDERPIN FUTURE MARGINS
Number | Anticipated | Average | Cost to | |
of plots | ave. revenue | plot cost | revenue | |
Plots owned with detailed planning | 47,053 | £218,811 | £29,994 | 13.7% |
Plots owned proceeding to planning | 23,155 | £200,211 | £19,493 | 9.7% |
Total owned | 70,208 | £212,677 | £26,531 | 12.5% |
Plots under control | 19,024 | £204,562 | £27,973 | 13.7% |
Total owned & under control | 89,232 | £210,947 | £26,838 | 12.7% |
Proceeding to contract (terms agreed) | 8,753 | £204,808 | £28,663 | 14.0% |
Grand total of all plots June 2020 | 97,985 | £210,398 | £27,001 | 12.8% |
Grand total of all plots December 2019 | 99,462 | £207,754 | £28,003 | 13.5% |
- Cost to revenue percentage of owned & controlled plots of 12.7% (Dec 19: 13.3%)
- Cautious, disciplined approach to land replacement
- Proforma margin based on owned land mix
- Industry leading land holdings
* Estimated weighted average gross margin - based on assumed revenues and costs at 30 June 2020 and normalised output levels
60.0% | |
50.0% | |
40.0% | |
% | |
marginGross | 30.0% |
20.0% |
10.0%
0.0%
40% gm*
33% gm*
24% gm*
29% of plots
50% of plots
21% of plots
Owned plots - 70,208
24
OFF-SITE MANUFACTURING - COMMITMENT TO SELF HELP
- Vertical integration allows security over key material availability and cost
- Over 100m bricks manufactured by Brickworks to date
- Tileworks commenced deliveries to sites in spring 2020 - c. 2m tiles manufactured
- Self-helpaction - supporting improvements in supply chain capacity and industry output
- Site skill pressures eased through use of Space4 and modern methods of construction
25
STRONG BALANCE SHEET
H1 2020 | H1 2019 | Change | ||||||||
Work in progress | £1,224m | £1,024m | + £200m | |||||||
Land | £1,897m | £2,013m | (£116m) | |||||||
Land creditors | £374m | £484m | (£110m) | |||||||
Cash | £829m | £833m | (£4m) | |||||||
Net cash * | £454m | £349m | + £105m | |||||||
ROCE ** | 27.8% | 40.5% | (12.7%) | |||||||
H1 2020 | H1 2019 | Change | ||||||||
Cash inflow from operations | £299m | £516m | (£217m) | |||||||
Decrease in land | £47m | £69m | (£22m) | |||||||
Decrease in land creditors | (£63m) | (£67m) | + £4m | |||||||
Increase in WIP | (£113m) | (£150m) | + £37m | |||||||
Other working capital movments | (£40m) | (£65m) | + £25m | |||||||
Tax paid | (£130m) | (£64m) | (£66m) | |||||||
Other | (£10m) | (£10m) | + £0m | |||||||
Cash (out)/inflow before financing | (£10m) | £229m | (£239m) | |||||||
- Excellent platform for future growth - effective management of the housing cycle
- Substantial work in progress investment
- £200m increase over June 2019 position
- 13% increase in WIP as a % of revenue ***
- Well judged land investment provides foundations for future growth - land payments of £167m (2019: £239m) including £107m of land creditor settlements (2019: £126m)
- Strong liquidity with cash of £829m (Dec 2019: £844m) - resilient operational cash flows in a period of substantial disruption
* Being cash less land creditors
- 12 month rolling average stated before goodwill impairment and includes land creditors
- Calculated from 12 months new housing revenue
26
STRONG LIQUIDITY
- Free cash absorption before capital returns of £15m (2019: £182m generated) - H1 2020 includes c. £90m of accelerated corporation tax paid on time and in full
-
Working capital investment of £170m during first half of 2020 (2019: £212m) - includes £129m in work in
progress (2019: £142m)
- Strong net cash* of £454m (2019: £349m)
* Being cash less land creditors
27
SUCCESSFUL MANAGEMENT OF THE CYCLE
- In paying all taxes in full and on time, H1 2020 includes c. £90m of accelerated corporation tax payments when comparing to prior year
- Judging scale and timing of capital deployment through the cycle critically important to strategic success
- Selective land replacement at the right time
- Ongoing investment ensuring appropriate work in progress levels are maintained - strengthening quality and
service
28
MODEST CAPITAL RETURN TO SHAREHOLDERS
- Reinvestment in the business and working capital needs remain a priority
- Covid-19impacts:
- Cancellation of the 125p per share return of surplus capital due to be paid 2 April 2020
- Postponement of the 110p per share final dividend for 2019 that was due to be paid 6 July 2020
Existing Plan | Original Plan | |||||
Regular | Top up | Total | ||||
payments | payments | payments | ||||
Total paid to 2019 | 680p | 275p | 955p | 390p | ||
2020 | 40p | - | 40p | 115p | ||
2021 | 125p | 110p | 235p | 115p | ||
TOTAL | 845p | 385p | 1230p | 620p | ||
- Modest interim dividend on account of full year 2019 given strong performance of the business
- Further capital return for the remainder of this year will continue to be assessed
- Future capital returns subject to regular review in line with existing policy
29
MARKET LEADING LONG TERM RETURNS | ||||||||||||||||||||||||||||||||||||
Persimmon plc - Long term margin and returns | ||||||||||||||||||||||||||||||||||||
45.0% | 5,000.0 | Total shareholder returns over the past 20 years (rebased to 100) | ||||||||||||||||||||||||||||||||||
40.0% | 4,500.0 | 4,200 | COVID | |||||||||||||||||||||||||||||||||
Change (%) | 20 years | 10 years | 5 years | 1 year | YTD | outbreak2 | ||||||||||||||||||||||||||||||
35.0% | 4,000.0 | 3,600 | Persimmon | 2,711.1% | 1,002.3% | 57.7% | 14.5% | (15.2%) | (30.3%) | |||||||||||||||||||||||||||
UK Housebuilders1 | 389.0% | 281.0% | (7.7%) | (20.1%) | (42.2%) | (49.0%) | ||||||||||||||||||||||||||||||
30.0% | 3,500.0 | FTSE 100 | 100.6% | 83.1% | 15.5% | (13.8%) | (16.9%) | (15.7%) | ||||||||||||||||||||||||||||
3,000.0 | employedCapital£m | 3,000 | 2,711% | |||||||||||||||||||||||||||||||||
marginGross% | ||||||||||||||||||||||||||||||||||||
25.0% | 2,000.0 | |||||||||||||||||||||||||||||||||||
22.4% | 2,500.0 | |||||||||||||||||||||||||||||||||||
2,400 | ||||||||||||||||||||||||||||||||||||
20.0% | 21.9% | |||||||||||||||||||||||||||||||||||
15.0% | £1,556.1m | 1,800 | ||||||||||||||||||||||||||||||||||
1,500.0 | ||||||||||||||||||||||||||||||||||||
10.0% | 1,000.0 | |||||||||||||||||||||||||||||||||||
1,200 | ||||||||||||||||||||||||||||||||||||
5.0% | 500.0 | |||||||||||||||||||||||||||||||||||
0.0% | 0.0 | 600 | 389% | |||||||||||||||||||||||||||||||||
Dec-99 | Jun-00 | Dec-00 | Jun-01 | Dec-01Jun-02 | Dec-02 | Jun-03 | Dec-03 | Jun-04 | Dec-04Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08 | Dec-08 | Jun-09 | Dec-09Jun-10 | Dec-10 | Jun-11 | Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Dec-14 | Jun-15 | Dec-15Jun-16 | Dec-16 | Jun-17Dec-17Jun-18 | Dec-18 | Jun-19 | Dec-19 | Jun-20 | |||||||||||||
101% | ||||||||||||||||||||||||||||||||||||
Capital employed (inc LCrs) | Gross margin % | |||||||||||||||||||||||||||||||||||
0 | ||||||||||||||||||||||||||||||||||||
ROACE % (inc LCrs) | Average - Gross margin % | |||||||||||||||||||||||||||||||||||
Average - ROACE % (inc LCrs) | Average - Capital employed (inc LCrs) | Jun-00 | Jun-01Jun-02Jun-03 | Jun-04 | Jun-05 | Jun-06Jun-07 | Jun-08Jun-09Jun-10 | Jun-11Jun-12 | Jun-13Jun-14 | Jun-15Jun-16Jun-17Jun-18Jun-19Jun-20 |
- Industry leading returns generated through effective management of the housing cycle - in the best long term interests of all stakeholders
Source: Datastream as of 30 June 2020 1 UK Housebuilder peers
2 Change since 21 February 2020
30
STRONG PLATFORM TO DELIVER FUTURE VALUE AND TO NAVIGATE POTENTIAL CHALLENGES
- Strong forward sales - £2.5bn
Half Year Forward Sales | Units | ASP | Revenue | ||
June 2020 | 10,105 | £184,005 £1,859.4m | |||
June 2019 | 9,128 | £177,684 £1,621.9m | |||
Movement | +11% | +4% | +15% | ||
Current Forward Sales | Units | ASP | Revenue | ||
(inc. 7 weeks post half year) | |||||
August 2020 | 12,615 | £196,823 | £2,482.9m | ||
August 2019 | 11,006 | £186,102 | £2,048.2m | ||
Movement | +15% | +6% | +21% | ||
- Since 1 July, private weekly sales rate of 0.97 homes per site, c. 49% ahead of last year
- Putting customers before volume - disciplined approach to sales release
- c. 55 new outlets to open through the second half of 2020
- Selling prices remain firm
- H2 2020 legal completion delivery to be at least in line with the second half of 2019
31
STRONG PLATFORM TO DELIVER THE COUNTRY'S HOMES
- Skilled management of the housing cycle places Persimmon in a position of strength for the future
- Strength of the balance sheet
- Cash deployment
- Strength of land holdings
- Benefits of the Customer Care Improvement Plan
- Existing infrastructure of the business
32
BALANCE SHEET STRENGTH PROVIDES OPTIONS
- Cash at the end of June of £829m
- No debt - £300m revolving credit facility undrawn
- High quality land holdings - c. 6 years supply depending upon volume delivery
- Modest land creditors with a good payment profile
- Strong position to navigate future challenges and take advantage of opportunities
33
MANAGING THE HOUSING CYCLE - SKILFUL CASH
DEPLOYMENT
- Vital to deploy and disinvest capital at the correct time in the cycle - in housebuilding this manifests in how you manage your land holdings
- Strength of land bank gives us options on when we needto buy land
- Total plots owned and under control at 89,232
- Represents c. 5.6 years forward supply (depending on volume delivery)
- c. 29,300 plots held under option that are proceeding through planning
- c. 14,500 plots controlled and allocated in local plans
- Total visibility - c. 133,000 plots
34
DISCIPLINED LAND ACQUISITION BASED ON STRICT CRITERIA
Strategic interests acquired during H1 2020
- Strategic land bank of c. 15,900 acres - potential to deliver a further 100,000 new homes
- Land creditors reduced to £374.5m with the majority settled over three years
- The ability to deploy more cash if we see compelling opportunities
35
CUSTOMER CARE IMPROVEMENT PLAN - CONFIDENCE FOR
FUTURE GROWTH
- The Customer Care Improvement Plan is in the process of being fully embedded in the business
- Systems and processes proving to be both efficient and resilient
- Culturally the customer is now at the centre of our business
- Confidence to grow output at the appropriate time
- We now have the ability to deliver high quality customer service and volume
36
STRONG INFRASTRUCTURE - SUPPORTING THE
OPPORTUNITIES FOR GROWTH
- 31 operating companies - ability to increase output at the appropriate time
- Excellent range and choice of sites and product across the country
- Skilled and motivated employees with an overwhelming commitment to Persimmon
- Senior management team with a proven track record of delivery
37
COMPANY PURPOSE - AT THE HEART OF THE COMPANY
- Challenges posed by Covid-19 shows the exceptional quality of the business
- Response both principled and agile to balance the needs of all our stakeholders
- Persimmon is positioned in a great place for the future
- Proven record of managing the housing cycle
- Industry leading land bank
- Industry leading balance sheet
- Customer Care Improvement Plan embedding in the business
- The exceptional quality of our colleagues
- Confident we can continue to deliver the country's new homes and deliver for all stakeholders
38
APPENDICES
- Appendix 1 - H1 2020 performance
| Appendix | 2 | - Half yearly profit & loss |
| Appendix | 3 | - Financial record: Income Statement and Balance Sheet |
- Appendix 4 - Half yearly sales profile
- Appendix 5 - Trading performance - Brand
- Appendix 6 - Trading performance - Divisional
- Appendix 7 - Analysis of unit sales
Appendix 8 - Land holdings at 30 June 2020
- Appendix 9 - Balance sheet
- Appendix 10 - Cash flows
| Appendix | 11 - Mortgage approvals for house purchase |
| Appendix | 12 - New housing starts |
39
APPENDIX 1: H1 2020 PERFORMANCE
Underlying trading (adjusted for goodwill impairment) | |||||||||||
H1 2020 | H1 2019 | ||||||||||
New housing | Total | % of revenue | Total | % of revenue | |||||||
Revenue | |||||||||||
£1,102.8m | £1,645.3m | ||||||||||
Cost of sales: | |||||||||||
- land cost | (£155.2m) | (14.1%) | (£229.8m) | (13.9%) | |||||||
- build and other direct costs | (£602.4m) | (54.6%) | (£860.0m) | (52.3%) | |||||||
Total cost of sales | (£757.6m) | (68.7%) | (£1,089.8m) | (66.2%) | |||||||
Gross profit | £345.2m | 31.3% | £555.5m | 33.8% | |||||||
Operating expenses | (£55.4m) | (5.0%) | (£50.5m) | (3.1%) | |||||||
Other operating income | £3.4m | 0.3% | £5.1m | 0.3% | |||||||
Underlying operating profit | £293.2m | 26.6% | £510.1m | 31.0% | |||||||
Change | |||||||||||
Finance income | £5.1m | £8.5m | |||||||||
Finance costs | (£4.3m) | (£5.2m) | |||||||||
Underlying pre-tax profit | £294.0m | £513.4m | -43% | ||||||||
Goodwill impairment | (£1.6m) | (£4.1m) | * 12 month rolling profit after tax generated from the | ||||||||
average of the opening and closing total equity for the | |||||||||||
Reported pre-tax profit | £292.4m | £509.3m | -43% | 12 month period | |||||||
Return on equity* | |||||||||||
21.5% | 31.0% | Appendix 1 - 1 of 2 | |||||||||
40
APPENDIX 1: H1 2020 PERFORMANCE
Brand Profile - 6 months ended 30 June 2020:
Unit | Completions | Average selling | Average price | Plots owned and | Plot count | ||
completions | change | price | change | under control | change | ||
Persimmon North | 1,872 | (40%) | £208,098 | + 2% | 34,926 | (2%) | |
38% | 39% | ||||||
Persimmon South | 1,783 | (24%) | £266,871 | (2%) | 28,984 | (6%) | |
36% | 33% | ||||||
Charles Church | 374 | (24%) | £338,455 | (5%) | 9,199 | (16%) | |
8% | 10% | ||||||
Partnerships | 871 | (46%) | £127,266 | + 5% | 16,123 | (9%) | |
18% | 18% | ||||||
Total | 4,900 | £225,066 | 89,232 | ||||
Change vs 30 June 2019 | (35%) | + 4% | (6%) | ||||
Appendix 1 - 2 of 2
41
APPENDIX 2: HALF YEARLY PROFIT & LOSS
Underlying performance: | 2020 | 2019 | 2019 | |
H1 | H1 | Change | FY | |
New housing | ||||
Unit completions | 4,900 | 7,584 | (2,684) | 15,855 |
Revenue | £1,102.8m | £1,645.3m | (£542.5m) | £3,420.1m |
Operating profit * | £293.2m | £510.1m | (£216.9m) | £1,036.7m |
Operating margin * | 26.6% | 31.0% | (4.4%) | 30.3% |
Net finance income | (£1.4m) | (£1.5m) | + £0.1m | (£3.8m) |
Net imputed interest income ** | £0.6m | (£1.8m) | + £2.4m | (£7.6m) |
Pre-tax profit * | £294.0m | £513.4m | (£219.4m) | £1,048.1m |
Pre-tax profit margin * | 26.7% | 31.2% | (4.5%) | 30.6% |
Pre-tax profit per plot * | £59,997 | £67,692 | (£7,695) | £66,102 |
- Underlying performance presented before goodwill impairment of £1.6m (H1 2019: £4.1m; FY 2019: £7.3m)
** Interest imputed in accordance with IAS 2 and IAS 18
Appendix 2
42
APPENDIX 3: FINANCIAL RECORD - INCOME STATEMENT
2018 | 2018 | 2019 | 2019 | 2020 | |
HY | FY | HY | FY | HY | |
Unit completions | 8,072 | 16,449 | 7,584 | 15,855 | |
4,900 | |||||
New housing revenue | £1,742.0m | £3,545.8m | £1,645.3m | £3,420.1m | £1,102.8m |
Average Selling Price | £215,813 | £215,563 | £216,942 | £215,709 | £225,066 |
Operating profit * | £518.2m | £1,091.9m | £510.1m | £1,036.7m | £293.2m |
Pre-tax profit * | £520.7m | £1,100.0m | £513.4m | £1,048.1m | £294.0m |
Basic EPS * | 136.3p | 286.3p | 130.6p | 269.1p | 75.1p |
Diluted EPS * | 131.5p | 283.7p | 130.2p | 268.6p | 74.9p |
Return on Average Capital Employed ** | 41.7% | 41.3% | 40.5% | 37.0% | 27.8% |
- Underlying performance presented before goodwill impairment of £1.6m (H1 2018: £4.4m; FY 2018: £9.2m; H1 2019: £4.1m; FY 2019: £7.3m)
** 12 month rolling average pre goodwill impairment of £4.8m (H1 2018: £10.0m; FY 2018: £9.2m; H1 2019: £8.9m; FY 2019: £7.3m) and includes land creditors
Appendix 3 - 1 of 2
43
APPENDIX 3: FINANCIAL RECORD - BALANCE SHEET
2018 | 2018 | 2019 | 2019 | 2020 | |
HY | FY | HY | FY | HY | |
Shareholders' funds | £2,836.3m | £3,194.5m | £2,837.5m | £3,258.3m | |
£3,450.6m | |||||
Cash | £1,154.6m | £1,048.1m | £832.8m | £843.9m | £828.9m |
Net asset value per share | 906.3p | 1006.0p | 890.8p | 1021.7p | 1081.9p |
Work in progress | £749.6m | £881.8m | £1,024.0m | £1,094.6m | |
£1,223.7m | |||||
% of revenue * | 21% | 25% | 30% | 32% | 43% |
Land | £2,132.3m | £2,077.2m | £2,013.0m | £1,938.6m | £1,896.6m |
% of revenue * | 61% | 59% | 58% | 57% | 66% |
Part exchange stock | £45.8m | £56.2m | £61.8m | £71.8m | £55.2m |
% of revenue * | 1% | 2% | 2% | 2% | 2% |
Shared equity debt | £104.0m | £86.9m | £73.7m | £68.6m | £62.7m |
% of revenue * | 3% | 2% | 2% | 2% | 2% |
Total % of revenue * | 86% | 88% | 92% | 93% | 113% |
Land creditor | £611.4m | £548.0m | £484.0m | £435.2m | |
£374.5m | |||||
% of land value | 29% | 26% | 24% | 22% | 20% |
* Calculated from 12 months new housing revenue
Appendix 3 - 2 of 2
44
APPENDIX 4 : HALF YEARLY SALES PROFILE
Appendix 4
45
APPENDIX 5: TRADING PERFORMANCE - BRAND
2020 | 2019 | |||||
New housing | H1 | H1 | Change | |||
No. | ||||||
No. | ||||||
Units | Persimmon Core | 3,655 | 5,470 | (33%) | ||
Charles Church | 374 | 493 | (24%) | |||
Partnerships | 871 | 1,621 | (46%) | |||
Total | 4,900 | 7,584 | (35%) | |||
£ | £ | |||||
Average Selling Price | Persimmon Core | 236,769 | 232,547 | + 2% | ||
Charles Church | 338,455 | 357,917 | (5%) | |||
Partnerships | 127,266 | 121,413 | + 5% | |||
Group | 225,066 | 216,942 | + 4% | |||
£m | £m | |||||
Revenue | Persimmon Core | 865.4 | 1,272.0 | (32%) | ||
Charles Church | 126.6 | 176.5 | (28%) | |||
Partnerships | 110.8 | 196.8 | (44%) | |||
Total | 1,102.8 | 1,645.3 | (33%) | Appendix 5 - 1 of 2 | ||
46
APPENDIX 5: TRADING PERFORMANCE - BRAND
2020 | 2019 | |||
New housing | H1 | H1 | Change | |
£m | ||||
£m | ||||
Gross Profit | Persimmon Core | 288.6 | 459.2 | (37%) |
Charles Church | 36.5 | 58.2 | (37%) | |
Partnerships | 20.1 | 38.1 | (47%) | |
Total | 345.2 | 555.5 | (38%) | |
Gross Margin | Persimmon Core | 33.3% | 36.1% | (2.8%) |
Charles Church | 28.8% | 33.0% | (4.2%) | |
Partnerships | 18.1% | 19.4% | (1.3%) | |
Total | 31.3% | 33.8% | (2.5%) |
Appendix 5 - 2 of 2
47
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL
30 June 2020 | ||||
New housing | Units | Average Sale | Annual average | Plots owned and |
No. | Price (£) | price change | under control | |
Yorkshire | ||||
341 | 191,015 | + 1% | 5,095 | |
Scotland | 271 | 204,926 | + 10% | 9,093 |
North West | 363 | 165,587 | + 7% | 4,135 |
North East | 337 | 181,226 | - | 11,327 |
Midlands | 657 | 207,791 | + 3% | 9,098 |
Eastern | 169 | 210,959 | (14%) | 2,455 |
Persimmon North | 2,138 | 193,650 | + 3% | 41,203 |
30 June 2019 | 3,639 | 188,041 | 42,711 | |
Change | (41%) | + 3% | (4%) | |
Appendix 6 - 1 of 3
48
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL
30 June 2020 | ||||
New housing | Units | Average Sale | Annual average | Plots owned and |
No. | Price (£) | price change | under control | |
Shires | 828 | 271,522 | + 9% | 14,601 |
Western | 652 | 226,607 | + 7% | 11,807 |
Southern | 455 | 248,743 | (1%) | 6,077 |
Wales | 353 | 169,810 | (4%) | 5,396 |
Persimmon South | 2,288 | 238,500 | + 3% | 37,881 |
30 June 2019 | 3,315 | 230,689 | 40,419 | |
Change | ||||
(31%) | + 3% | (6%) | ||
Appendix 6 - 2 of 3
49
APPENDIX 6: TRADING PERFORMANCE - DIVISIONAL
30 June 2020 | |||
New housing | Units | Average Sale | Plots owned and |
No. | Price (£) | under control | |
Charles Church | 474 | 301,920 | 10,148 |
30 June 2019 | 630 | 311,549 | 11,956 |
Change | |||
(25%) | (3%) | (15%) | |
Appendix 6 - 3 of 3
50
APPENDIX 7: ANALYSIS OF UNIT SALES
* Persimmon data represents completions in the period ** NHBC data represents registrations in the period NHBC Source: NHBC Housing Market Report (July 2020)
Appendix 7 - 1 of 3
51
APPENDIX 7: ANALYSIS OF UNIT SALES - PRODUCT MIX
Persimmon data represents completions in the period and
NHBC data represents registrations in the period
NHBC Source: NHBC Housing Market Report (July 2020)
Appendix 7 - 2 of 3
52
APPENDIX 7: ANALYSIS OF UNIT SALES - PRICE RANGE
Appendix 7 - 3 of 3
53
APPENDIX 8: LAND HOLDINGS AT 30 JUNE 2020
Number | Number | Number | Anticipated | Average | Cost to | Cost to | |
of plots | of plots | of plots | ave. revenue | plot cost | revenue | revenue | |
Dec 2019 | Jun 2020 | Change | Jun 2020 | Dec 2019 | |||
Plots owned with detailed planning | 46,055 | 47,053 | + 998 | £218,811 | £29,994 | 13.7% | 14.5% |
Plots owned proceeding to planning | 25,887 | 23,155 | (2,732) | £200,211 | £19,493 | 9.7% | 10.8% |
Total owned | 71,942 | 70,208 | (1,734) | £212,677 | £26,531 | 12.5% | 13.2% |
Plots under control | 21,304 | 19,024 | (2,280) | £204,562 | £27,973 | 13.7% | 13.8% |
Total owned & under control | 93,246 | 89,232 | (4,014) | £210,947 | £26,838 | 12.7% | 13.3% |
Proceeding to contract (terms agreed) | 6,216 | 8,753 | + 2,537 | £204,808 | £28,663 | 14.0% | 15.6% |
Grand total of all plots | 99,462 | 97,985 | (1,477) | £210,398 | £27,001 | 12.8% | 13.5% |
Grand total of all plots - Dec 2019 | £207,754 | £28,003 | 13.5% | ||||
Cost to revenue % | |||||||
Plot cost to revenue ratio history: | Jun 2020 | Dec 2019 | Jun 2019 | Dec 2018 | Jun 2018 | Dec 2017 | Jun 2017 |
Plots owned with detailed planning | 13.7% | 14.5% | 13.9% | 14.2% | 14.8% | 14.4% | 15.1% |
Plots owned proceeding to planning | 9.7% | 10.8% | 11.6% | 11.4% | 10.5% | 10.3% | 9.6% |
Total owned | 12.5% | 13.2% | 13.1% | 13.2% | 13.5% | 13.2% | 13.7% |
Plots under control | 13.7% | 13.8% | 15.5% | 15.1% | 15.4% | 15.5% | 16.6% |
Total owned & under control | 12.7% | 13.3% | 13.5% | 13.6% | 13.9% | 13.7% | 14.4% |
Proceeding to contract (terms agreed) | 14.0% | 15.6% | 15.3% | 15.6% | 17.7% | 18.8% | 21.0% |
Grand total of all plots | 12.8% | 13.5% | 13.7% | 13.8% | 14.2% | 14.2% | 15.0% |
Appendix 8
54
APPENDIX 9: BALANCE SHEET
2020 | 2019 | 2019 | |||
H1 | H1 | Change | FY | ||
Work in progress | £1,223.7m | £1,024.0m | + £199.7m | £1,094.6m | |
Land | £1,896.6m | £2,013.0m | (£116.4m) | £1,938.6m | |
Land creditors | £374.5m | £484.0m | (£109.5m) | £435.2m | |
Part exchange stock | £55.2m | £61.8m | (£6.6m) | £71.8m | |
Shared equity debt | £62.7m | £73.7m | (£11.0m) | £68.6m | |
Cash | £828.9m | £832.8m | (£3.9m) | £843.9m | |
Shareholders' funds | £3,450.6m | £2,837.5m | + £613.1m | £3,258.3m | |
Capital employed | £2,621.7m | £2,004.7m | + £617.0m | £2,414.4m | |
Net asset value per share | 1081.9p | 890.8p | +191.1p | 1021.7p | |
Capital Returns (paid and accrued) | value | £0.0m | £747.8m (£747.8m) | £747.8m | |
per share | - | 235p | (235p) | 235p |
Appendix 9
55
APPENDIX 10: CASH FLOWS
H1 20 | H1 19 | Change | |||||
£m | £m | ||||||
Operating cash (before working capital movements) | 298.6 | 516.2 | -42% | ||||
Investment in working capital: | |||||||
Decrease in gross land | 46.8 | 69.0 | |||||
Decrease in land creditors | (63.4) | (66.7) | |||||
Net land movement | (16.6) | 2.3 | |||||
Increase in WIP, part exchange and showhouses | (112.5) | (149.9) | |||||
Other working capital movements | (40.5) | (64.6) | |||||
Cash flow from operations | 129.0 | 304.0 | -58% | ||||
Net interest and similar charges received | 0.1 | 0.9 | |||||
Tax paid | (129.7) | (63.6) | |||||
JV net funding movement | - | 0.9 | |||||
Net capital expenditure | (9.6) | (12.8) | |||||
Cash flow before dividends, share transactions and financing | (10.2) | 229.4 | |||||
Net share transactions | 0.6 | 1.0 | |||||
Net settlement of shared based payments | - | (42.6) | |||||
Capital return paid to Group shareholders | - | (397.7) | |||||
Cash flow before financing | (9.6) | (209.9) | |||||
Lease capital payments | (1.8) | (2.0) | |||||
Payment of Partnership liability to pension scheme | (3.6) | (3.4) | |||||
Decrease in cash | (15.0) | (215.3) | |||||
Appendix 10 | |||||||
56
APPENDIX 11: MORTGAGE APPROVALS
150 | ||||||||
Average monthly | ||||||||
approvals | since | |||||||
beginning of 1993: | ||||||||
79,650 | ||||||||
Volume ('000) | 100 | |||||||
Dec 2013: | Dec 2015: | Dec 2017: | Dec 2019: | |||||
- | Dec 2009: | 72,800 | 71,000 | 62,000 | 68,200 | |||
Approvals | ||||||||
59,000 | Dec 2011: | |||||||
52,300 | ||||||||
Dec 2014: | Dec 2016: | Dec 2018: | ||||||
50 | 68,400 | 64,800 | ||||||
60,100 | ||||||||
Jun 2020: | ||||||||
Dec 2012: | 40,000 | |||||||
Average monthly | Dec 2010: | 55,000 | ||||||
approvals | since | 42,600 | ||||||
beginning of 2008: | ||||||||
57,690 | ||||||||
Nov 2008: | ||||||||
27,000 | ||||||||
0 |
Appendix 11
Source: Bank of England Data
57
APPENDIX 12: NEW HOUSING STARTS
Source: NHBC Housing Market Report (July 2020) | Appendix 12 |
58
DISCLAIMER
Important Notice
Certain statements in this results presentation are forward looking statements.
Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements.
Forward looking statements regarding past trends, results or activities should not be taken as a representation that such trends, results or activities will continue in the future.
Undue reliance should not be placed on forward looking statements.
59
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Persimmon plc published this content on 17 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 08:07:15 UTC