TIDMPSN
RNS Number : 2328L
Persimmon PLC
29 April 2020
TRADING UPDATE
WEDNESDAY 29 APRIL 2020
Persimmon plc ("Persimmon or "the Group") is today providing an
update on trading and its ongoing response to COVID-19, in the
period from 1 January 2020 to date, ahead of its Annual General
Meeting ("AGM") which is being held at 12.00 noon today.
Highlights
Dave Jenkinson, Group Chief Executive, said: "In these
unprecedented times we continue to be guided by our clear purpose
of delivering long term sustainable returns for all our
stakeholders. Focused management of the risks inherent in the
housing market cycle has given us the financial strength to respond
effectively and responsibly to the crisis and support our
customers, our colleagues and suppliers, and the local communities
we work in across the country, as the UK meets the challenges of
the pandemic. We recognise the important contribution we make to
the economy and wider society, and are determined to play our
part.
"Our strong financial position and liquidity has enabled us to
maintain our operational capability by retaining all staff on full
pay through this period, without recourse to any Government
financial assistance; to offer necessary support to our suppliers,
subcontractors and local tradespeople; and to maintain our
community and charity programmes, despite the economic shock of
COVID-19.
"Persimmon is responding to the crisis from a position of
strength, to the benefit of all its stakeholders; our long-term
strategy and business model recognises the cyclical nature of the
housing market, minimises financial risk through the cycle, and
provides the flexibility needed to manage effectively through this
difficult period. The Government has been clear that it wants the
UK's housebuilders to get back to building and this week we have
started the phased process of getting back to work safely on site
in order to deliver the new homes the country needs."
-- Trading Highlights
Ø Strong start to the year in the period before the COVID-19 lockdown
- average private sales rate per site was c. 10% ahead year-on-year
in the first 11 weeks of the period
Ø Customer enquiries have remained at good levels through the
lockdown period providing some encouragement on the resilience
of demand
Ø Current forward sales position, including legal completions
taken to date in 2020, remains robust at GBP2.4bn (2019: GBP2.7bn)
Ø The average private selling price of a new Persimmon home in
our forward order book is c. GBP244,500 (2019: c. GBP237,850),
c. 17% below the UK national average (1) , reflecting our commitment
to providing 'homes for all'
-- Operational Highlights
Ø From the start of this challenging time for the UK, our priority
has been the safety, health and wellbeing of our customers,
our workforce and the public and Persimmon fully supports the
action taken by the UK Government and continues to follow all
public health guidance
Ø As announced on 24 April 2020, having developed and tested new
site protocols incorporating the latest Government and Construction
Leadership Council guidance on social distancing and protective
measures, the Group has commenced a phased restart to work on
site
Ø To protect our entire workforce, these new measures will be
strictly enforced by a specialist team, with a 'COVID-19 Passport
to Work' governing site operation
Ø The Group has not made use of the Government's Coronavirus Job
Retention Scheme to furlough staff and has no current plans
to access any UK Government's COVID-19 funding
-- Customers remain at the centre of our business
Ø Implementation of the Group's customer care improvement plan
remains a key priority
Ø Customer care teams have remained active through the shutdown
period and scheduled works will recommence as soon as restrictions
on home visits are relaxed
Ø Investment in our Homebuyer Retention Scheme, and customer care
resource and training, had led to a c. 20% reduction in the
time taken to resolve snagging items prior to the onset of the
COVID-19 outbreak
Ø The first phase of the Group's customer portal, supporting customers
from the point of their New Home Demonstration, will be operational
shortly, with phase two due be rolled out in the second half
of 2020
Ø Development of "the Persimmon Way", the Group's consolidated
approach to new home construction, continues to progress well
-- Engaged and motivated colleagues underpin the Group's success
Ø Providing ongoing support to our colleagues working from home
with regular contact through online team meetings and training
modules
Ø Strong belief in 'opportunities for all' with significant investment
in training and apprenticeships across the Group to support
career progression
Ø Real Living Wage criteria introduced for all staff
Ø Recognised as an industry leader by the Social Mobility Pledge
Ø Excellent employee engagement - 96% of staff understand how
their job contributes towards what Persimmon is trying to achieve
-- Committed to creating and supporting sustainable communities
Ø The Group's activities support over 50,000 (2) construction
and supply chain jobs, including local tradespeople and suppliers
in all 31 of our regional operating companies
Ø Persimmon's construction activities generated GBP522m of affordable
housing and planning contributions during 2019
Ø The Group believes firmly in building 'homes for all', with
more than 50% of its private new homes sales being made to first
time buyers and c. 21% of its total volumes coming from its
Partnerships business which serves those on lower incomes
Ø Persimmon remains fully committed to its community and charity
programmes and the work of The Persimmon Charitable Foundation
and our partnership with Team GB, will continue through 2020
-- Careful management of housing cycle risk is enabling Persimmon to
respond to the crisis from a position of strength
Ø A strong sustainable business model that; places customers at
the centre of our business, maintains high quality land holdings,
judges capital deployment at the right time in the cycle and
minimises financial risk
Ø Robust liquidity with a current cash position of GBP600m (as
at 24 April 2020), deferred land commitments of GBP163m to the
end of the current year and access to an undrawn GBP300m Revolving
Credit Facility
Ø Persimmon's strong financial liquidity has enabled the Group
to maintain its operational capability by supporting all our
colleagues on full pay through the site shutdown period
Ø The Group's suppliers and subcontractors have been offered financial
support, to help them manage through the crisis and preserve
jobs and to ensure continuity of supply in the recovery
Ø Colleagues working from home have continued to progress critical
tasks during the site shut down period to prepare sites for
the restart of activity. Home working will continue subject
to further guidance provided by the Government and Public Health
England
Ø The increased investment in work in progress over 2019/20 places
the Group in a strong position to support customers and provides
some mitigation to the temporary site closures
Ø The Group's off-site manufacturing facilities will provide continuity
of supply of key materials and will help mitigate any disruption
as construction activity recommences
-- Update on the Group's purpose and culture to be given at today's
AGM
Ø A copy of the presentation to be given at the AGM is available
here www.persimmonhomes.com/corporate
Ø Shareholders can view a live webcast of the AGM here https://persimmon.sparq.me.uk/
from 12.00 today
Footnote 1
National average selling price for new build homes sourced from
the UK House Price Index as calculated by the Office for National
Statistics from data provided by HM Land Registry
Footnote 2
Estimated using an economic toolkit
For further information please contact:
Persimmon plc Citigate Dewe Rogerson
Dave Jenkinson, Group Chief Executive Simon Rigby
Mike Killoran, Group Finance Director Kevin Smith
Jos Bieneman
Tel: +44 (0) 1904 642 199 Tel: +44 (0) 20 7638 9571
TRADING UPDATE
Response to COVID-19
Our over-riding priority during this time has been to protect
customers, colleagues, the public and the business, while securing
our strong financial position.
From the start of the pandemic, the Group has adhered to
Government guidance and implemented measures to keep its customers,
workforce, and the public, safe. In late March, the Group closed
its sales offices and commenced an orderly shutdown of its
construction sites with only essential work taking place to ensure
that partly built homes were made safe and no customers were left
in a vulnerable position. All regional offices also closed,
operating with only a skeleton staff to support the wider workforce
working from home in line with Persimmon's existing business
continuity planning.
Persimmon has maintained its current workforce, including those
that were stood down during the period of low activity, to ensure
that we were in a position to respond quickly when our construction
sites were able to reopen.
As announced on 24 April 2020, working closely with colleagues,
sub-contractors and suppliers, the Group has developed and tested a
range of new site protocols, which are fully compliant with UK
Government and Construction Leadership Council guidance and which
incorporate the necessary social distancing restrictions. The Group
has therefore commenced a phased return to work, with stringent
measures in place to ensure compliance with the new procedures.
The Group's COVID-19 Steering Committee are continuing to
closely monitor the situation and are able to respond effectively
and flexibly to any changes in the circumstances relating to the
pandemic.
Cash and liquidity
Persimmon benefits from strong liquidity with a current cash
position of GBP600m (as at 24 April 2020), deferred land
commitments of GBP163m to the end of the current year and access to
an undrawn GBP300m Revolving Credit Facility ("RCF"). The Group has
recently extended its RCF which now has a five-year term out to 31
March 2025.
The Group has a well-established strategy of minimising
financial risk through the housing cycle. The Board considers that
preserving liquidity and maximising financial flexibility is in the
best long-term interests of all our stakeholders. With the COVID-19
outbreak this has involved a prudent reassessment of surplus
capital, in line with stated policy. This resulted in the
cancellation of the surplus capital return of 125p per share by way
of an interim dividend which was due to be paid on 2 April 2020. In
addition, the proposed annual final dividend of 110p per share due
to be paid on 6 July 2020 has been postponed. The payment of a
final dividend for the year ended 31 December 2019 will be
re-evaluated in the second half of this year.
The Board has thoroughly stress tested the Group's liquidity
position and remains confident of the Group's future prospects.
Operational Update
Sales
The Group made a strong start to the year and entered this
unprecedented time in a robust position. Thereafter, increased
economic uncertainty, together with the impact of the Government's
social distancing measures, inevitably led to a delay in the timing
of legal completions and a material slowdown in sales rates. For
the initial eleven weeks of the year prior to the commencement of
the widespread measures taken to mitigate the COVID-19 outbreak,
the Group's average private sales rate per site was c. 10% ahead of
the same period last year. This increase, together with continued
good levels of customer enquiries since, provides encouragement
with regards to the resilience of demand for good quality newly
built homes at attractive prices across the UK. In the six weeks
ended 26 April 2020 the Group secured 962 gross private sales
reservations, with a total of 948 legal completions being made in
the same period.
We remain committed to providing 'homes for all' with the
average private selling price of a Persimmon new home in our
forward order book being c. GBP244,500 (2019: c. GBP237,850), c.
17% below the UK national average (1) . We have maintained a
substantial forward order book of new homes for delivery to our
Housing Association partners, working closely with them to support
the needs of lower income families. Over the last five years, the
Group has provided over GBP1.6bn of social housing to support the
creation of inclusive and sustainable communities across the
UK.
Our ongoing customer care improvement plan
The Group has maintained its higher level of investment in work
in progress levels in the year to date as we continue to put our
customers before volume as part of our customer care improvement
programme. Our team of Independent Quality Inspectors is now well
established and has been routinely performing inspections at all
key stages of construction, assuring the quality of our customers'
new homes. The Group's Homebuyer Retention Scheme, an industry
first, is reinforcing our prioritisation of customer care
throughout the business.
Our Construction Working Group, headed by the Group's
Construction Champion, continues to develop "the Persimmon Way", a
consistent, 'end to end' approach to site development and
construction, which will be rolled out across the Group by the end
of this year. Once the Persimmon Way has been fully established,
our independent quality inspection team will be responsible for
assuring compliance, which also will be subject to external
verification. Online mandatory training modules providing
instruction and guidance on delivering the Persimmon Way are being
rolled out to all our operational teams.
Off-site manufacturing
Our off-site manufacturing capability for timber frames, closed
panel construction systems, bricks and roof tiles will ensure
continuity of supply of key materials on the reopening of our
construction sites. Tileworks, the Group's new roof tile facility,
is now fully operational and will shortly recommence deliveries to
site.
Outlook
The duration and extent of the impact of COVID-19 on the Group
remains uncertain, however, we remain confident of the Group's
future success. Our long-term strategy and business model
recognises the cyclical nature of the housing market and our strong
balance sheet, high quality land holdings and healthy liquidity
equip the Group with the sound fundamentals required to meet the
current challenges. The Group's current forward sales position,
with total forward sales revenue, including legal completions taken
to date in 2020, is GBP2.4bn (2019: GBP2.7bn). The financial
position of the Group is strong and our selling prices presently
remain firm. During these uncertain times, maintaining financial
flexibility and supporting all of our workforce ensures that we are
being able to gradually reopen sites and provide high levels of
quality and service to our customers on delivery of their new
homes.
Update on Purpose and Culture
Persimmon is confident that the Group has a clear purpose,
supported by a strong culture and a set of common values which set
high standards of behaviour by all colleagues in the performance of
their duties. This confidence is underpinned by the findings of the
Group's recently completed employee engagement survey, which found
that 96% of colleagues understand how their own job contributes
towards Persimmon's overall objectives. Environmental and
sustainability responsibility and initiatives are an integral part
of our Company purpose and plans, and will be an area of increasing
focus in 2020.
Further details are contained within the AGM presentation which
can be found here
www.persimmonhomes.com/corporate
Shareholders can view a live webcast on the AGM here
https://persimmon.sparq.me.uk/ from 12.00 today.
Next Update
The Group will provide a further update in its next Trading
Update on 9 July 2020.
Footnote 1
National average selling price for new build homes sourced from
the UK House Price Index as calculated by the Office for National
Statistics from data provided by HM Land Registry
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END
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