TIDMPSN
RNS Number : 5381E
Persimmon PLC
08 July 2021
TRADING UPDATE
THURSDAY 8 JULY 2021
This announcement contains inside information.
Persimmon plc ("the Group") announces the following trading
update ahead of its Half Year Results to 30 June 2021, which will
be released on Wednesday 18 August 2021. This statement covers the
period from 1 January 2021 to 30 June 2021.
Dean Finch, Group Chief Executive, said:
"Persimmon performed well during the first half of the year
delivering new home sales completions approaching the levels
achieved in the first half of 2019. I am particularly pleased that
we are continuing to achieve pre-Covid build rates across our sites
whilst successfully maintaining higher levels of build quality and
customer service. Our current HBF customer satisfaction score is
91.9%(1) , with Persimmon's monthly performance trending ahead of
five star for the last eighteen months. We are providing much
needed new homes to our customers whilst continuing to drive
forward our ambition of building right, first time, every time.
"Customer demand for our new homes has been strong right across
the UK with healthy sales reservation rates through the period. The
Group has an excellent forward order book at the end of June of
GBP1.82bn.
"In supporting the Group's high quality growth we are taking
advantage of attractive land investment opportunities and
successfully brought over 10,000 new plots into the business across
48 locations in the period. We remain focused on progressing our
pipeline of new sales outlets through the planning system and into
production, and on our ongoing build programmes, to provide
improved stock availability and choice for our customers.
"Persimmon is well placed for the future with a strong balance
sheet and healthy liquidity. As such, we are pleased to announce
the accelerated payment of the surplus capital distribution of 110p
per share in respect of the year ended 31 December 2020, which will
be paid on 13 August 2021."
-- Highlights
- 7,406 legal completions (2020: 4,900, 2019: 7,584)
- Total revenue of GBP1.84bn (2020: GBP1.19bn, 2019: GBP1.75bn)
- Forward sales of GBP1.82bn (2020: GBP1.86bn, 2019: GBP1.62bn)
- c. 285 active sales outlets on average throughout the first half
with c. 85 forecast to open in H2 2021
- Cash of GBP1.32bn (2020: GBP0.83bn) and land creditors of c. GBP365m
(2020: GBP374.5m)
Trading review
The Group has performed well in the six months to 30 June 2021.
Total revenues(2) for the period were GBP1.84bn (2020: GBP1.19bn,
2019: GBP1.75bn). The Group delivered 7,406 new homes to its
customers (2020: 4,900, 2019: 7,584), generating housing revenues
of GBP1.75bn (2020: GBP1.10bn, 2019: GBP1.65bn). The Group's total
average selling price has increased by 4.9% over the first half of
last year to c. GBP236,200 (2020: GBP225,066, 2019: GBP216,942)
reflecting the stronger market conditions experienced throughout
the period. This includes 6,104 sales into the owner occupier
market with an average selling price of c. GBP258,200 (2020:
GBP246,208, 2019: 242,912). Currently this house price growth is
mitigating the effect of the upwards pressure being experienced on
the industry's cost base.
UK housing market fundamentals remain supportive with low
interest rates, improving levels of mortgage availability, ongoing
Government support and strong customer demand. The Group's average
weekly private sales rate per site for the first half was over 30%
ahead of 2020, the increase reflecting the unprecedented site
shutdowns in 2020 due to the pandemic, but was also c. 20% ahead of
2019.
We continue to focus on advancing our build programmes to
improve the level of stock availability and choice for customers.
The implementation of the Group's consolidated approach to
construction, the Persimmon Way, is reinforcing the consistent
application of our quality assurance processes, which is
instrumental in delivering high quality homes to our customers. We
are pleased with the build rates being achieved by the Group, which
returned to pre-Covid levels by the end of June 2020 and are now
following the normal seasonal pattern. The Group had work in
progress of c. 4,800 equivalent units of new home construction at
the end of June (2019: c. 6,150), reflecting the strength of legal
completions over the last twelve months, the anticipated reduction
in the number of sales outlets and the effect of the lower
construction activity in the first half of 2020 due to the initial
measures introduced to mitigate the impact of the pandemic.
The Group has continued to add to its high quality land
holdings, pursuing land investment opportunities selectively,
resulting in land spend of c. GBP200m. During the period, the Group
brought over 10,000 new plots into the business across 48
locations. The strength of the Group's land holdings and our
continued responsible replacement strategy provide excellent
support for Persimmon's future high quality growth.
Persimmon's balance sheet and liquidity remain robust. The Group
held GBP1.32bn of cash at 30 June 2021 (30 June 2020: GBP0.83bn)
with deferred land commitments of approximately GBP100m to the end
of the current year. In addition, the Group has an undrawn GBP300m
Revolving Credit Facility which has recently been extended, having
a five year term out to 31 March 2026.
Operational review
We have taken steps to further strengthen the implementation of
the Persimmon Way, the Group wide consolidated approach to new home
construction, to realise our ambition of building right, first
time, every time. The number of Independent Quality Controllers has
increased by 70% since 31 December 2020, with the aim of doubling
the team by the end of the year. In addition, Persimmon has signed
up to the 'Building a Safer Future Charter', which is aiming to
raise standards and improve building safety culture and leadership,
demonstrating the Group's commitment to raising build quality
standards.
The improvements these initiatives are bringing, whilst also
continuing to grow the business, are increasingly recognised by our
customers. The Group's HBF customer satisfaction score continues to
trend ahead of the five star threshold of 90% and is currently
91.9% for the survey year beginning on 1 October 2020(1) . We
welcome the introduction of the New Homes Ombudsman to drive
quality improvements throughout the industry.
As announced on 10 February 2021, the Group set aside GBP75m to
assist with works to ensure the safety of residents of
multi-occupancy properties built by Persimmon which contain banned
cladding. All relevant management companies, managing agents, or
building owners have been contacted and this work is
progressing.
The Group is pleased to have reached an agreement with the
Competition and Markets Authority ("CMA") on its enquiries into the
sale of leasehold houses, as announced on 23 June 2021. The
voluntary undertakings agreed with the CMA largely extend the
Group's existing Right to Buy scheme and offer further support to
our customers. We believe these voluntary undertakings, together
with the other changes to the Group's processes that are underway,
further emphasise our commitment to customers and build quality and
will position the business well for the introduction of the New
Homes Quality Code, once the current consultation process is
complete.
Sustainable communities
The Group plays an important role in the communities it serves,
providing local job opportunities and much needed new homes at
affordable prices. Our average private selling price is c. 15%
lower than the national average for new-build homes sold to owner
occupiers(3) and, in the period, approximately 50% of our private
new homes were delivered to first time buyers. In addition, the
Group has delivered 1,302 new homes to its housing association
partners for provision of new housing to lower income families
supporting the creation of inclusive communities across the UK
(2020: 871, 2019: 1,621).
Capital Return Programme
The Board re-iterated its commitment to total capital returns of
235p per share in respect of the financial year ended 31 December
2020, at the release of Persimmon's final results on 3 March 2021.
The Group announced the acceleration and payment of the regular
annual distribution for the year ended 31 December 2020 of 125p per
share as an interim dividend, which was paid on 26 March 2021. In
addition, the Group announced its intention to split the 110p per
share surplus capital payment into two payments, one to be paid in
August 2021 and the second in December 2021.
Given the Group's ongoing strong performance and cash
generation, the Board is pleased to announce today that it intends
to return the 110p per share of surplus capital as a single
additional interim dividend payment in relation to the financial
year ended 31 December 2020. This payment will be made on 13 August
2021 to shareholders on the register on 23 July 2021, accelerating
and consolidating the previously indicated payments, and returning
the Group to distributing two capital return payments every 12
months, a year earlier than originally envisaged. There will be no
further dividend payments in relation to the year ended 31 December
2020.
As indicated at the release of Persimmon's final results on 3
March 2021 the Board intends to return to the pre-Covid profile of
capital return payments in 2022, being distributions in relation to
the financial year ending 31 December 2021. The payment of the
regular annual distribution of capital of 125p per share will be
paid in early July 2022 and any surplus capital in relation to the
financial year ended 31 December 2021 will be paid in late
March/early April 2022. The value of the surplus capital return, as
always will be subject to continual assessment by the Board in line
with the Group's strategy.
Outlook
As noted above, the Group's average weekly private sales rate
per site was ahead of both 2020 and 2019 in the period and customer
enquiry levels remain strong. As at 30 June 2021, the value of the
Group's forward sales remained healthy at c. GBP1.82bn (2020:
GBP1.86bn, 2019: GBP1.62bn). The average selling price of new homes
forward sold to owner occupiers was c. GBP250,350, c. 3.3% ahead of
the prior year (2020: GBP242,400). The total number of new homes
forward sold at 30 June 2021 was c. 9,550 (2020: 10,105) with c.
4,950 sold into the private market (2020: 5,151). We are
experiencing improvements to selling price across our regional
markets which will continue to mitigate supply chain cost
pressures.
Persimmon has a strong national site network and is expected to
operate on c. 300 sales outlets on average throughout the year. Our
regional management teams are working hard with local planning
authorities and communities to commence construction on c. 85 new
sales outlets during the second half of the year, reinforcing the
Group's platform for future high quality growth. As previously
reported, the Group expects to deliver a similar level of new home
completions in the second half of the year to that achieved in the
first six months.
The Board recognises the positive impact the vaccination
roll-out programme is having on the UK's economic performance and
prospects. However, as the pandemic continues we remain mindful of
the on-going uncertainties regarding the UK economy, including
employment levels, consumer confidence, and the supply chain
impacts of both Brexit and the pandemic. Despite this, the longer
term fundamentals of the housing market remain strong and, with the
Group's UK wide network offering new homes at compelling value, we
are confident of Persimmon's future success. Our long-term
strategy, which recognises the risks associated with the cyclical
nature of the housing market by maintaining operational
flexibility, investing in high quality land, minimising financial
risk and deploying capital at the right time in the cycle, will
continue to ensure that the Group is well positioned for the
future.
The Board would like to take this opportunity to thank the
Persimmon team for their hard work and commitment throughout this
period.
The person responsible for the release of this announcement on
behalf of the Group is Tracy Davison, Company Secretary.
There will be a call for analysts at 09.00 BST today. Please use
the dial-in details below:
Telephone number: +44 (0) 33 0551 0200
Password: Persimmon
An audiocast of the call will be available on
www.persimmonhomes.com/corporate from this afternoon.
For further information please contact:
Dean Finch, Group Chief Executive Kevin Smith
Mike Killoran, Group Finance Director Jos Bieneman
Persimmon Plc Ellen Wilton
Tel: +44 (0) 1904 642199 Citigate Dewe Rogerson
Tel: +44 (0) 20 7638 9571
Footnote 1
The Group participates in a National New Homes Survey, run by
the Home Builders Federation, the rating system is based on the
number of customers who would recommend their builder to a
friend.
Footnote 2
Total Revenues - The Group's total revenues include the fair
value of consideration received or receivable on the sale of part
exchange properties and income from the provision of broadband
internet services. Housing revenues are the revenues generated on
the sale of newly built residential properties only.
Footnote 3
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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