TIDMPSN
RNS Number : 7148R
Persimmon PLC
09 November 2021
TRADING STATEMENT
TUESDAY 9th NOVEMBER
Persimmon plc today announces its Trading Statement which covers
the period from 1 July 2021 to 8 November 2021 ('the period').
Highlights
Dean Finch, Group Chief Executive, commented:
"Persimmon continued to perform well through the period against
a backdrop of healthy demand, with private sales reservation rates
per site remaining well ahead of 2019, as sales followed a more
normal seasonal pattern as expected when compared to 2020.
"As previously reported, we anticipate growth in new home sale
completions for the full year will be c. 10% over last year, our
customer satisfaction score continues to track ahead of the five
star threshold and healthy selling prices and our off-site
manufacturing capabilities are mitigating inflationary pressures,
to support our industry leading margins.
"While the industry continues to face challenges in the UK
planning system, we are successfully bringing new land into
construction and growing our already strong UK wide outlet
network.
"With GBP1.15bn of forward sales reserved beyond the current
year and a quality pipeline of new developments coming on stream,
Persimmon has a robust platform to support its continued high
quality growth and the delivery of superior long-term sustainable
returns for the benefit of all stakeholders."
-- Strong performance for the period - average private new
home sales reservation rate per site c. 16% ahead of 2019.
-- Robust platform for growth - expect to deliver c. 10%
increase in legal completions in 2021 (2020: 13,575 legal
completions) and GBP1.15bn of forward sales reserved beyond
the current year (2019: GBP0.95bn).
-- Five star quality and service - levels of customer satisfaction
at over 92%(1) for the current survey year, with the Group
scoring above the five star threshold since January 2020.
-- Industry leading margins - balance of inflationary pressures
being managed well supporting resilient industry leading
margins.
-- Substantial high quality land replacement - c. GBP380m
land spend incurred in the year to date whilst maintaining
the Group's high quality return requirements.
-- Strong financial position - healthy liquidity with a cash
balance of c. GBP895m at 31 October 2021 (2020: GBP960m).
Trading
The Group continued to perform well through the period with
sales rates remaining well ahead of 2019 levels, and trading
following a more normal seasonal pattern than the heavily pandemic
disrupted year of 2020. Demand for newly built homes continues to
be healthy underpinning positive pricing conditions. The market has
taken the changes in the Government's Help to Buy scheme and the
stamp duty regime in its stride. Customer enquiry levels have
remained encouraging throughout the period. The Group's average
private sales reservation rate for the period was c. 16% higher
than for 2019 reflecting the supportive market conditions and
Persimmon's market positioning. Persimmon builds more newly built
homes for first time buyers and first time movers, with an average
selling price in the private owner occupier market c. 15%(2) lower
than the national average in support of creating inclusive and
sustainable communities.
We continue to manage the current industry supply chain
difficulties well, with our Brickworks, Tileworks and Space4 timber
frame manufacturing facilities playing an important role in
providing security of supply and mitigating some of the impact of
rising materials costs. As reported at the start of the current
year, we expect our industry leading margins will remain resilient,
accommodating the expected increase in our build cost inflation
this year of c. 5.0%.
Persimmon continues to bring new land through into construction
despite the well-documented planning delays suffered by the
industry. Whilst these delays are frustrating for the communities
we serve over the short term, with the healthy levels of early
interest in these new developments we are receiving from customers,
we remain confident they will provide a high quality platform in
support of the future growth of the Group. Despite this and
Persimmon's particularly strong sales rates over the pandemic
period, we are strengthening the Group's outlet network and look
forward to maintaining this momentum. With the Group's build rates
continuing at pre-pandemic levels, we continue to ensure that our
construction programmes progress to the appropriate stage prior to
sales release in support of high levels of quality and service.
During the year, we have continued to take advantage of exciting
high quality opportunities in the land market bringing over 16,200
new plots into the business. The Group's land spend for the year to
date is c. GBP380m (including c. GBP160m of deferred land creditor
payments) with c. GBP180m of land spend being incurred in the
period (including c. GBP70m of deferred land creditors) reflecting
the further progress in advancing the Group's land holdings.
Persimmon's financial position and liquidity remain robust. The
Group held c. GBP895m of cash at 31 October 2021 with deferred land
commitment maturities of just c. GBP30m to the end of the current
year. In addition, the Group has an undrawn GBP300m Revolving
Credit Facility which has a five year term out to 31 March
2026.
Continuing to support our customers
The Group continues to place customers at the centre of our
business. The Persimmon Way, our end to end consolidated
construction process, is operating well across the Group, providing
the framework for consistently delivering high quality homes,
'building right, first time, every time'.
Our expanding team of Independent Quality Controllers are
supporting the delivery of improvements in construction quality,
helping to upskill our work force on site and supervising the
execution of consistently higher quality standards. The Group's HBF
customer satisfaction score is currently over 92%(1) for the survey
year commencing 1 October 2020. As a planned integral part of the
Persimmon Way, an external audit of the Group's development
processes has commenced with the aim of covering all operating
companies by summer 2022. This advisory process will help support
consistent compliance with the Persimmon Way, identify areas of
best practice, and assist in the further development of the Group's
construction disciplines.
The Persimmon Way is being supported by training programmes for
on-site teams and technology to track and record quality checks
during the construction and pre-handover process. We welcome the
introduction of the New Homes Quality Code and New Homes Ombudsman
and their aim of driving improved build quality and customer
service across the industry.
To improve the quality of both the way we communicate with our
customers and the information provided, the Group is continuing to
develop its customer portal, providing our customers with a hub to
access relevant information and documentation concerning their home
from the point of reservation.
Helping create sustainable communities
The Group remains focused on offering "homes for all" and on
creating and supporting sustainable communities. We are pleased to
enable customers to access the housing market with c. 50% of our
private homes sold to first time buyers in the period. Our average
selling price in the owner occupier market is c. 15%(2) below the
UK national average.
Earlier in 2021, the Group set science based carbon reduction
targets for its operations and indirect emissions, which are
aligned with the aims of the Paris Agreement, and continues to
research the most effective approaches to decarbonising both its
supply chain and the homes that we build when occupied. Further
development of the Group's Space4 timber frame insulated panel
manufacturing processes will form an important part of achieving
the Future Homes Standard requirements.(3)
FibreNest, the Group's full fibre to the premises broadband
business, provides an important service to our customers, enabling
home working and providing access to other online services. The
growth of the FibreNest business continues with more than 18,000
households now connected across over 230 of our developments. We
believe FibreNest will play an important and growing role in
supporting households' lifestyles adapt to their requirements as
they seek to take advantage of the further developments in digital
technology, and in helping them become more energy efficient in
support of addressing their climate change concerns.
Outlook
The fundamentals of the UK housing market remain strong with
good levels of consumer demand and confidence, mortgage
availability and low interest rates. As noted above, both average
private sales reservation rates and forward sales reserved beyond
2021 remain healthy. As expected, we are on track to grow our new
home sale completions by c. 10% this year (2020: 13,575 new homes)
and we are targeting a return to 2019 volume levels in 2022. We
continue to manage the inflationary pressures in the industry well
and anticipate that margins will remain resilient.
The Group has a strong network of developments across the UK,
with good visibility over its future pipeline and whilst delays in
the planning system are frustrating for the industry, we anticipate
our future sales releases will be well received. As we approach the
quieter trading weeks of December and the Christmas holiday period,
we are looking forward to being able to take advantage of the
traditionally strong spring selling season in the new year. The
Group is advancing its build programmes effectively to provide a
healthy work in progress platform in support of next year's
sales.
Persimmon remains in a strong position whilst remaining mindful
of the evolving challenges as a consequence of Brexit and the
continuing concerns relating to the pandemic on cost inflation and
the supply chain and their impact on interest rates, consumer
confidence and the UK economy. The execution of the Group's well
established strategy of maintaining financial flexibility,
minimising financial risk, and deploying capital at the right time
in the housing cycle, will enable it to successfully manage these
uncertainties.
We will give a further update on progress and trading, following
the Group's year end, on 13 January 2022.
Persimmon will host a conference call with analysts at 09.00 am
today. To participate please use the details below:
Dial in: +44 (0) 33 0551 0200
Passcode: Persimmon
For further information please contact:
Dean Finch, Group Chief Executive Kevin Smith Tel: +44 (0) 7710
815 924
Mike Killoran, Group Finance Director Jos Bieneman Tel: +44 (0) 7834
336 650
Persimmon Plc Ellen Wilton Tel: +44 (0) 7921
352 851
Footnotes
1. The Group participates in a National New Homes Survey, run
by the Home Builders Federation. The Survey year covers the
period from 1 October to 30 September. The rating system
is based on the number of customers who would recommend their
builder to a friend.
2. 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.
3. The Group's approach to reporting its Sustainability Accounting
Standards Board (SASB) disclosures as contained in the 2020
Annual Report (AR) is referenced as good practice by the
Financial Reporting Council here:
https://www.frc.org.uk/news/july-2021/frc-outline-necessary-action-for-effective-esg-rep
. The Group has also been recognised by the FRC for providing
good practice disclosures regarding its Streamlined Energy
and Carbon Reporting in its Annual Report 2020. The FRC's
thematic review on the subject is available here
https://www.frc.org.uk/getattachment/e3a464de-cf0a-4b5f-9000-656427a863be/FRC-SECR-Thematic-Report-2021.pdf
In addition, the Group's TCFD disclosures have been recognised
as providing useful information for investors by the FRC
in its 'Taskforce on Climate-related Financial Disclosures
(TCFD): ahead of mandatory reporting, available here
https://www.frc.org.uk/getattachment/09b5627b-864b-48cb-ab53-8928b9dc72b7/FRCLab-TCFD-Report_October-2021.pdf
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END
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